Government picks admiral as new head of Itaipu

João Francisco Ferreira — Foto: Divulgação
João Francisco Ferreira — Foto: Divulgação

Admiral Anatalício Risden Junior will be the new Brazilian director-general of Itaipu Binacional. The military takes the place of the retired general João Francisco Ferreira, who resigned on Tuesday. The information was first reported by Valor and later confirmed by Binacional.

Sources in the electric sector consulted by Valor informed that his position was being negotiated by center-right parties that wanted to have a say, and Mr. Ferreira had anticipated his resignation to avoid wear and tear. The name of the substitute has yet to be evaluated by the board of Eletrobras, Brazil’s main power utility Eletrobras.

The confirmation, however, must be officially published on the Daily Gazette. Mr. Risden has a degree in Naval Sciences, is 62 years old, was born in Curitiba (Paraná), and served for more than 40 years of active duty in the Navy.

The announcement of Mr. Ferreira’s departure was made to advisors, assistants and directors. The military is reticent and prefers not to stay during the transition period because, according to him, he no longer sees any sense in making decisions knowing that he will not stay.

Mr. Ferreira took over the command of Binacional in April 2021, replacing the also General Joaquim Silva e Luna, who held the post for two years and today is the CEO of Petrobras after being appointed by President Jair Bolsonaro.

Source: Valor international

https://valorinternational.globo.com/

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Carrefour may be forced to sell 11 stores to merge with BIG

Carrefour (CRFB3) compra Grupo Big e dispara na Bolsa

Antitrust watchdog CADE greenlighted the purchase of BIG by Carrefour provided that part of the stores of the chain bought is sold. There are 11 stores on the list of recommendations for divestment, according to an agreement between Carrefour and CADE.

The term of the Merger Control Agreement (ACC) signed foresees structural measures related to the competitive behavior to be adopted by Carrefour. In addition to the sale of supermarkets, hypermarkets and cash-and-carry stores, the proposal defines commitments related to non-competition and the economic maintenance of the stores until the effective transfer.

BIG has 388 stores and, in a statement released Tuesday, Carrefour highlighted, without providing figures, that the closings are less than 10% of the total base, and lower than initially unveiled by the CADE. Carrefour also says that the proposal is yet to be evaluated by the CADE’s court by June 2022, if the board decides to use the maximum deadline.

The CADE’s analysis indicates that there are no competition concerns in the wholesale distribution and gas station markets. In the retail and cash-and-carry segment, the antitrust watchdog removed competitive risks in most relevant markets, but for a small portion, it says that there are not enough elements to rule out the likelihood of companies exercising market power.

The eleven units listed by CADE could be sold by Carrefour are located in Rio Grande do Sul, Ceará and Pernambuco. The South and Northeast regions have 82% of BIG’s points. According to the list, in Gravataí (Rio Grande do Sul) are the Nacional supermarket, the BIG hypermarket and a Maxxi cash-and-carry store. In Juazeiro do Norte, Ceará, the hypermarket BIG Bompreço and the cash-and-carry store Maxxi appear on the list.

In Olinda, Pernambuco, the hypermarket BIG Bompreço is on the list. In Recife, in the same state, hypermarket Walmart Caxangá and hypermarket Walmart Casa Forte may be sold.

In Santa Maria, in the same state, the hypermarket BIG Nossa Senhora de Lourdes may be sold, while in Viamão, the hypermarket BIG Santa Cecília and the cash-and-carry store Maxxi may have the same fate.

The market expectation is that the value per asset will be below the ceiling of R$50 million paid in store purchases by funds in recent years.

Amounts in this range have been disbursed for stores in places like São Paulo and Rio de Janeiro. Carrefour declined to comment.

“We can buy if CADE really makes the decision, but the best units are in the Northeast region, because it is harder to find good locations in these capitals,” says the manager of a fund focused on retail properties said. Another source recalled that the South region doesn’t have as much demand for real estate now. “In Gravataí and Santa Maria, for example, it is not difficult to find well-located land,” said this source.

“There are cases of companies that ‘keep’ a lot of assets in regions that they know can be targeted by CADE. They keep these businesses on their feet, without much money, until the sale is approved”, the head of a cash-and-carry chain that competes with Maxxi said.

One point raised by an executive of another fund is limitations to be defined by the CADE. He recalled that, in order to maintain the level of regional competition, buyers may have to continue with the food retail activity in these locations for a certain period.

In the market today, the scenario is of companies leaving the hypermarket sector, while investments have been basically focused on cash and carry. GPA, owner of Extra, sold 71 hypermarket stores to Assaí for R$4 billion three months ago). Cash-and-carry stores and small supermarkets have been leading the organic expansion.

Among wholesalers, there is a greater number of deals being closed, and of companies with cash – despite the fact that many have already disbursed a large sum of money in acquisitions and openings since 2019, including Assaí, Fort (Pereira group) and Muffato group.

Real estate funds are likely to have the appetite to make bids as they could buy the stores and rent them. This is not a very long list as there are two main active players in the sector. One is the FII SuccesPar Varejo, which acquired nine stores from GPA between 2019 and 2020 and closed one of the largest recent deals among funds – the purchase of 17 properties, including buildings and land, from the same group for R$1.2 billion in October.

In another deal, in September 2020, two funds from TRX Gestora de Recursos agreed to buy 11 GPA stores for R$233.6 million.

Despite the worsening of the market environment since the end of last year, an executive sees room for attracting new resources focused on segments with proven return potential, considering the performance delivered in the portfolios.

Source: Valor international

https://valorinternational.globo.com/

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Brazil stock market sees strong inflow of foreigners

The battle for listings and stock market reforms: evolution or revolution? | International Financial Law Review

The macroeconomic challenges and uncertainties brought by the presidential elections this year have not prevented the arrival of a substantial amount of funds from foreign investors in the Brazilian stock market, which has ensured positive returns for the Ibovespa in 2022, unlike the New York markets. By January 21, the net inflow of foreign funds into the B3 secondary market had reached R$20.1 billion, the highest since January of last year, when inflows totaled R$23.6 billion.

Representatives of foreign firms told Valor, however, that they don’t see better fundamentals here and that external factors, including the monetary tightening led by the U.S. Federal Reserve and more optimistic prospects for commodities, explain the flow. Those factors, they say, have increased global demand for assets in emerging countries.

The dynamics has been helping Ibovespa to outperform peers from developed markets. While Brazil’s benchmark stock index rose 5.13% in 2022, the S&P 500 fell 8.6%.

Juliano Arruda, head of Latin American equities at Goldman Sachs, said that last year the global equity funds raised about $950 billion – an unprecedented amount – and Brazil ended up benefiting. This year, equity funds are still raising funds and, by mid-January there were about $67 billion of inflows in products of this type around the world.

“The difference is that, with the repricing of interest rates in the U.S. driven by a more hawkish Federal Reserve, there is an outflow of resources from the United States and record flows to emerging markets,” Mr. Arruda said.

Another factor expanding the demand for emerging market stocks, especially Latin American, is the favorable wind for commodities in 2022. While the main oil benchmarks are up more than 10% for the year, iron ore sees gains of the same magnitude.

“About $15 billion has flowed into emerging markets in the last three weeks, roughly in a distribution of 80% to equities and 20% to debt. Latin American equity markets have done especially well – probably in the wake of the strong start to the year for commodities, as well as signs that China is ready to start boosting its economy after resetting its strategy last year,” said Chris Turner and Francesco Pesole, strategists at ING.

According to David Beker, head of Brazil and Latin America Economics at Bank of America, there is greater optimism about the growth of China today and this benefits companies related to the dynamics of the Asian country, especially Vale. The mining company – which have a weight of nearly 15% in Ibovespa – is up 7.8% in 2022.

“The more attractive price levels we saw at the end of the year, the weakened real and less political noise probably also helped,” Mr. Beker said.

In the view of Esteban Polidura, head of products for the Americas at Julius Baer, there is a gradual rotation from growth – share classes that have high future growth prospects built into their prices, typically found in the technology sector – to value companies, which have cheaper multiples and are typically from the financial and basic materials sectors.

This is because, he said, higher interest rates tend to impact growth stocks more than any other type of stock. “I would link the flow precisely to a global shift to value stocks and Brazil is a good example of a market that is now perceived as value. However, we need to wait to see whether this will be lasting or not. It will depend a lot on Fed signals, and one must also monitor how the global appetite for risk will be,” he said. Still, according to Mr. Polidura, it is key to follow the elections in Brazil, which are likely to increase the volatility of local assets.

For Mr. Beker, with BofA, it will be difficult for the Ibovespa or the emerging markets to continue to see a better performance than the developed markets as interest rates go up in the U.S. “On the other hand, this rise in the basic materials and energy sectors may continue to benefit us, as we saw at the beginning of the year,” he said.

From the local standpoint, nothing justifies a great improvement in local fundamentals, said Mr. Arruda, from Goldman Sachs. “This will only change when we have more visibility regarding the elections,” he said.

He also mentions the possibility of this flow reversing course. As the United States face tightened financial conditions, including falling stock markets and rising interest rates, at some point the Federal Reserve could signal a pause in the monetary tightening cycle. “The flow from growth to value and from developed to emerging can be reversed if the Fed slows down the pace,” he said.

Robert Davy, emerging markets fund manager at Schroders, has a more constructive view regarding the local market, based on the perspective that the monetary tightening cycle started early in Brazil, which can be advantageous for local risk assets.

“In 2021, the country suffered with inflation and the consequent cycle of high interest rates. In 2022, the rest of the world will look at the same issues, while Brazil has already started this process. So, we may still have, this year, inflation falling and a reversal of interest rates, which would put Brazil in a great position,” he said.

The view is similar to that of Emy Shayo Cherman, J.P. Morgan’s strategist for Latin America and Brazil. According to her, the country seems to be well advanced in the monetary tightening cycle, which means an advantage relative to other emerging economies.

“In principle, this flow is likely to continue. The multiples of the shares have risen in recent days, but are still quite discounted and we have the impression that the downward revision of profits has also begun to stabilize,” she said.

According to her, the earnings season ahead will be very important to define how sustainable is this foreign flow. “I think that on the macroeconomic side, nobody expects big improvements; the expectation here is just that the peak of inflation is behind us,” the strategist said.

Mr. Davy, with Schroders, said he is not too scared about the upcoming presidential election. He says the polls have given clear indications of who the new president will be, and it remains for the market to wait and see how the new government will build its policies.

“I was already working with emerging markets in 2002, when Lula first won,” he said, citing former president Luiz Inácio Lula da Silva (2003-2010), which is a presidential candidate again this year and is ahead in the polls. “We were tense and some local analysts calmed us down, saying that his administration would be better than expected.” He added: “The result seems clear now. We just need to understand what will happen with the state-owned companies, the country’s fiscal policy, the dynamics between [Brazilian Development Bank] BNDES and private-sector banks.”

Frederico Sampaio, chief investment officer of equities at Franklin Templeton in Brazil, also says that foreign investments are not explained by an improvement in the fundamentals of national assets. For him, the flow is a direct consequence of the low prices of local stocks, a move that was driven by withdrawals from investment funds since the end of last year.

“When the Selic was at 2% a year, even hedge funds focused their funds on the stock market. Now we are seeing the reversal of this, often forced by investor withdrawal. It is a brutal change that does not speak to the fundamentals of the companies. The macro has even changed, but there was not such a big revision in the companies’ results to justify this”, he says.

He cites the example of digital retail and technology stocks so cheap that managed to rise this year in sessions in which interest rates were advancing strongly. Despite higher interest rates and some disappointing results, the devaluation of these stocks was so “bizarre” that it opened space for “less obvious” trading moves, he said.

From here on out, however, Brazil depends on Brazil, Mr. Sampaio said. “Moves out there have impacts here, but the long term depends more on what is done at the local level. The country and the market need a positive growth perspective, and the problem is that, again, we haven’t managed to put in place the necessary structural changes to get to this point,” he said.

Source: Valor international

https://valorinternational.globo.com/

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Petrobras becomes asset in presidential campaigns

Política de Bolsonaro tornou Petrobras mais vulnerável a crises – RBA

The privatization of Petrobras and the future of its fuel prices promise to be recurrent issues in this year’s political agenda. The reactions of the main presidential hopefuls to the increase announced by the state-owned company in the prices of diesel and gasoline this month give the tone of what to expect in the debate — which will probably go beyond the presidential race and contaminate campaigns for governor.

Jair Bolsonaro (Liberal Party, PL) enters 2022 in campaign for reelection, but under pressure from fuel inflation — an issue that is dear to truck drivers, the government’s base of support, but which affects society in general. After facing increases of 46.5% in the price of gasoline, 45.6% in diesel and 35.8% in bottled gas in 2021, according to data from the National Petroleum Agency (ANP), the Brazilian consumer deals, again, with the prospect of more expensive products this year.

The appreciation of oil — tied to the depreciation of the Real against the dollar — is expected to help keep the debate about fuel prices in evidence. In 2018, the truckers strike had already put the issue in the spotlight and agitated the electoral race that year. This time, the inflation of oil products emerges as a trump card to be exploited by Mr. Bolsonaro’s opposition. During his first three years in office, the president created a gas subsidy for low-income families, but was unable to find a solution to stop the increase in diesel and gasoline prices in Brazil.

The discussion about prices is followed by the debate about the social role and potential privatization of Petrobras. Mr. Bolsonaro often tries to dodge the political cost of higher fuel prices by claiming he has no control over the state-owned company’s prices. When reacting to the 8% increase in diesel and 4.85% increase in gasoline announced by the company this month, the president said: “If I could, I would get rid of Petrobras.” It was not the first time he signaled his interest in privatizing the company. In November, he called the state-owned oil company a “monster” and spoke openly of his interest in privatizing it. The agenda is welcomed by the government’s economic team but has never advanced in practice, just as it never did in other administrations that considered it.

Mr. Bolsonaro’s favorable position towards the sale of the company contrasts with the nationalist discourse that the president himself came to assume in the first half of 2021. Unhappy then with the prices practiced by the state-owned company, he interfered by removing the CEO of the company. To justify the change and the demand for a “more social look” at the oil behemoth, he resorted to a famous slogan: “O Petróleo é nosso” (Oil is ours) — which goes back to the marketing campaign for the creation of Petrobras, in the 1950s.

The privatization of the oil company promises to be polarized: former judge Sérgio Moro (Podemos) has already taken a stand in favor of deepening the privatization agenda, although he has already said, at the end of 2021, that the Petrobras case requires studies. João Doria (Brazilian Social Democratic Party, PSDB), governor of São Paulo, advocates for a model in which the state-owned company is divided and privatized, in sequence, in slices, in order to avoid the formation of a private monopoly in the country.

On the other side of the debate, Luiz Inácio Lula da Silva (Workers Party, PT) said last week that privatizations such as those of Eletrobras and Petrobras assets may be reviewed if he is elected. According to him, it is important that “serious people, when trying to buy Brazilian state-run companies that have been privatized, take into account that we will change governments and we [a hypothetical PT government] will rediscuss this.”

The state-owned Petrobras is also a topic dear to Ciro Gomes (Democratic Labor Party, PDT), who has even aired on social media a series of videos with his plans for the company and, like Mr. Lula da Silva, sees the oil giant as an inducer of the country’s economic development. He has even promised to buy back shares from private investors, in order to give the company a more state-oriented profile.

Petrobras is 68 years old and has been managed, throughout its history, by groups with different economic thoughts. It is a mixed economy company, controlled by the federal government, but 63.25% of its capital is in the hands of investors. The dichotomy between pursuing profitability and serving public interests is reflected in the company’s own bylaws, which state that it is governed by the rules of private law, but may, provided it is reimbursed for it, assume commitments “under conditions different from those of the private sector.”

In the debate about the social role of Petrobras, the company (under the administration of General Joaquim Silva e Luna) responded to criticism about the high fuel prices with a significant increase in dividends, under the justification that the greatest contribution that the state-owned company can give to society is to remain financially healthy and pay taxes and dividends to the state, so that it can then execute public policies with the money received. In total, Petrobras paid $27 billion in dividends to the federal government in 2021.

Even after President Bolsonaro’s intervention in the command of Petrobras, in 2021, the company – under the administration of Mr. Silva e Luna, a general handpicked by the president, reduced the frequency of hikes, but without changing, in essence, the alignment to international prices. The risks regarding changes in the governance of the oil company – under the current or future administrations – have never left the radar of the financial market, even though, due to the high dividends paid, the company now enjoys prestige among investors.

The fact that Messrs. Lula da Silva and Moro are candidates this year may put Petrobras’s corruption scandals brought to the fore by Operation Car Wash at the center of the campaigns. Mr. Lula da Silva was convicted precisely by Mr. Moro, then a judge, for passive corruption and money laundering. Mr. Lula da Silva was imprisoned for 580 days, between 2018 and 2019. The convictions were later overturned by the Federal Supreme Court (STF) in 2021, and the former president regained his political rights. In a preview of this debate, in December, Mr. Lula da Silva said that Car Wash “almost broke Petrobras.” Mr. Moro stroke back, saying that “what damaged Petrobras and the country was the stealing during the PT government.”

Messrs. Gomes and Doria also try to position themselves in the so-called third way and took advantage of Petrobras’s recent price adjustment to share their plans. Mr. Gomes said he intends to end the “criminal” price policy of the state-owned company, based on the alignment to the import parity price. In the case of diesel, for example, he proposes replacing the current model with a pricing policy that reflects Petrobras’s average production costs, the price of diesel in the Gulf of Mexico and the export price of Brazilian diesel. Mr. Lula da Silva has also said, by the end of 2021, that he intends to end the international parity of oil products.

Mr. Doria is in favor of creating a stabilization fund to dampen the upward movements. The mechanism would be financed with resources from the private sector. The creation of a fund of this type (financed with a tax on oil exports, in this case) is currently being considered in the Senate. The bill provides for taxing oil exports and displeases the sector.

Chamber of Deputies Speaker Rodrigo Pacheco (Democrats, DEM), who also intends to run for president, has promised to put the project on the agenda in February. In 2021, Mr. Pacheco was a central character in talks with governors in the decision of the states to freeze in November, for 90 days, the sales tax ICMS rate on oil products.

During the last few years, Mr. Bolsonaro has fought with the governors about who is to blame for the inflation of oil products. The president often blames state taxes for the rise.

The ICMS accounts, on average, for 26% of the final price of gasoline and 15% of diesel. Petrobras prices, in the refineries, correspond to 34% of the final price of gasoline and 55% of diesel. The current form of ICMS collection acts in a pro-cyclical manner as it helps to make oil products more expensive at times when they are skyrocketing at the pumps. The Chamber passed a law in 2021 according to which, in practice, the ICMS tax would no longer have this pro-cyclical character, but the bill has stalled in the Senate.

The dispute between Mr. Bolsonaro and the governors will continue in 2022. The states announced their intention to unfreeze the ICMS rate after Petrobras announced the hike earlier this month. The president reacted and pressured the governors again by defending a constitutional amendment that would allow the government to zero federal taxes on fuel, temporarily, without the need to present a source of compensation, as provided in the Fiscal Responsibility Law. The idea is that the states would also be authorized to do the same with the ICMS.

The proposal, however, is encountering resistance among governors, given the fiscal crisis in the states. In addition, there are doubts about the effectiveness of the measure — which has already been tested between March and April 2021, when Mr. Bolsonaro zeroed federal taxes on diesel, but saw prices rise anyway.

Source: Valor international

https://valorinternational.globo.com/

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OECD calls for reduced deforestation in Brazil

Mathias Cormann — Foto: Herve Cortinat/OECD
Mathias Cormann — Foto: Herve Cortinat/OECD

The Organization for Economic Cooperation and Development (OECD) on Tuesday invited Brazil to open membership discussions — but has imposed conditions: effective protection of the environment and action on climate, including halting deforestation, as well as the fight against corruption. The invitation to Brazil and five other countries — Argentina, Peru, Romania, Bulgaria, and Croatia — was approved by consensus by the 38 members of the OECD.

The invitation for talks come five years after Brasília formally requested membership – which has become a priority for the country’s foreign policy. It is a victory for Brazilian diplomacy, since the expectation in Europe was that this would hardly happen before the November 2022 presidential elections, due to the “great reticence” of some members towards President Jair Bolsonaro. France joined the consensus by signaling that it will be “demanding and vigilant” in negotiations with Brazil, according to European sources.

The OECD’s approval means just that — starting negotiations. The entity sent a letter to President Bolsonaro on Tuesday. And the understanding in the organization’s circles is that the country that responds first — confirming commitments to OECD values — starts the process first. In fact, there seems to be some concern that one or the other will take longer. The current government of Argentina may have some difficulty with capital controls, for example, notes one source.

Negotiations could take three to five years for the country to complete the process of compliance with the OECD’s 253 legal instruments. The invitation for membership will come after the negotiations, so not before 2025.

In a statement released early Tuesday evening, OECD Secretary-General Mathias Cormann said the process for acceptance as a member will include a strict and in-depth assessment by more than 20 technical committees of the candidate country’s alignment with OECD standards, policies and practices. As a result of those technical reviews — and prior to any invitation to candidate countries to join the organization as members — changes in the candidate country legislation, policy and practices will be required to align them with OECD standards and best practices, thus serving as a powerful catalyst for reform.

“Brazil has intensified its participation in the OECD since the request for accession [in 2017] and now we are well prepared to move forward,” said the Brazilian ambassador to the entity, Carlos Márcio Cozendey.

Last week, the Minister of Economy, Paulo Guedes, sent a letter to the OECD assuring commitment that Brazil will comply with the codes of capital liberalization and invisible transactions, the entity’s two main instruments in the economic aspect. This move strengthened “Brazil’s credentials” to finally receive the invitation, according to a government source. In any case, the parallel process in the OECD Council of Ministers was already underway. None of the other five candidate countries for membership has even begun the process of binding to the organization’s required codes.

These codes allow aspiring countries to make gradual progress toward liberalization of capital, investment, and services, with expectations of an improved business environment. And, according to sources, before sending the liberalization and intangibles codes to Congress, the government needs to comply with those requirements.

In Brazil, the new foreign exchange law has been approved. Being part of the OECD means having greater contact and more convergence with international best practices, as well as a boost to the domestic reform agenda, according to the government’s evaluation. But the OECD itself signaled that the candidates should commit themselves to other priority issues.

“The OECD invitation translates the international recognition for the agenda of structural economic reforms led by Minister Guedes and supported by President Bolsonaro,” said the Secretary of International Affairs of the Ministry of Economy, Erivaldo Gomes. “At the same time, it stresses the importance of following up on those reforms, especially the tax overhaul, a necessary condition to complete the process of joining the organization.”

For the National Confederation of Industry (CNI), this is “an extremely important step for the Brazilian productive sector,” which will serve as an impetus to leverage important reforms, increase the competitiveness of industry, and foster more sustainable growth in the country.

Brazil has been a key partner of the OECD since 2012 and formally applied to join the group in 2017. It is also admittedly the candidate country most convergent with the organization’s legal instruments — and the country most engaged with the organization’s committees and working groups, integrating discussions in more than 30 instances.

Source: Valor international

https://valorinternational.globo.com/

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Stone exports from Brazil to Arabs up 59%

Brazilian stone exports grew 39% - Agência de Notícias Brasil-Árabe

São Paulo – Exports of ornamental stones from Brazil to the Arab countries were up 59% in 2021 year on year, grossing approximately USD 10 million. Despite not being one of the top destinations of Brazilian ornamental rocks, the industry is optimistic with the result of sales to the region, industry group Centrorochas reported.

The top Arab buyers of rocks from Brazil last year were the United Arab Emirates with a 48.3% share, Lybia at 30.4%, Qatar at 9.4%, Algeria at 4.8%, and Iraq at 2.5%. The rates take into account the total shipments to Arab markets.

“The Arab market is strategic for Brazil in regard with exports, given the potential and the high consumption of ornamental rocks in the region. It’s a priority market of It’s Natural – Brazilian Natural Stone, a project that we carry out in partnership with Apex-Brazil. We believe this region holds an extremely  large potential, and we’re working on actions to strengthen the brand. An example was participating in The Big 5 202. Brazil is among the top ornamental stone suppliers in the world and has increasingly stood out in the supply of finished products, serving big projects across the world,” Centrorochas Tales Machado was quoted as saying in a statement.

Overall exports

Ornamental stone exports from Brazil posted an all-time record in 2021, topping pre-pandemic levels. Revenue reached USD 1.34 billion. Last year, 2.4 million tonnes of rocks were exported from Brazil to 132 countries in five continents, up 35.5% year on year.

One of the reasons is a higher confidence of businesspeople in exporting their products following the signing of an industry agreement between Centrorochas and the Brazilian Trade and Investment Promotion Agency (Apex-Brazil). The entities developed the project It’s Natural – Brazilian Natural Stone, which currently supports around 140 firms by encouraging exports.

The United States ranked first as the top consumer of rocks from Brazil at 62.7%, followed by China at 11.5%, Italy at 6.5%, and Mexico at 3.8%. These four countries are part of the eight target market pointed by the industry projects. The others are the UAE, India, United Kingdom, and Russia

“In a year with serious logistical difficulties, the country’s stone industry hit an all-time high. The credibility of Centrorochas among businesspeople, together with a milder situation of the pandemic in the second half of 2021, the development of actions of the industry project and the resumption of the global construction industry, contributed to this increase. We topped by almost USD 40 million our largest revenue up to then, which had been seen in 2013,” Tales Machado was quoted as saying.

“The year of 2021 was full of challenges, but together we knew how to turn them into opportunities and victories. It’s rewarding to see that our partnership with the ornamental stone industry produced record-high exports, thus creating more jobs and revenue to thousands of Brazilian families,” Apex-Brasil president Augusto Pestana said in a statement.

Source: NewsNow

https://www.newsnow.co.uk/h/Business+&+Finance/Economy/International/Brazil

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Brazil changes visa rules to attract digital nomads

Biz Center

The Brazilian government has amended immigration rules to grant temporary visas to professionals working remotely in a bid to attract well-paid individuals to contribute to the country’s economy.

Announced today (24), the measures establish an initial one-year visa, which can be renewed for an equal period. According to justice secretary and head of the National Immigration Council, José Vicente Santini, the new regulations are expected to boost local tourism and respond to global trends.

“Digital nomads’ salaries come from external sources, and the resources these immigrants bring can boost the national economy. This is an important step for Brazil to promote one of the world’s most modern working models,” he said.

Professionals can apply for the digital nomad visa at any Brazilian consular office, presenting proof of their remote worker status and documents such as an employment contract with an international organization and health insurance and evidence of availability means of subsistence in Brazil.

On the other hand, the increase of Brazilian remote workers taking up jobs with foreign employers has been a concern for the sector. The Federation of Associations of Brazilian Information Technology Companies (Assespro) launched a manifesto today calling for public policies to prevent a “labor blackout” of skilled tech professionals.

According to the trade body, the growing demand for IT experts globally and the acceleration of remote working has contributed to many experienced professionals being hired by companies abroad, without having to emigrate, in a phenomenon described as a “virtual brain drain”.

The association warned that best available estimates indicate that Brazil’s shortage of skilled professionals is expected to grow to 450,000 within three years. It added that the lack of strategies and policies from central government to support innovation and skills creation has been discussed since 2018. Still, the scenario remains unchanged in terms of strategy, while execution has become increasingly unviable due to the various budget cuts suffered by the Ministry of Science, Technology and Innovation in recent years.

Stressing the real possibility that Brazil may lose a significant amount of its technology experts to employers overseas, Assespro urged government leaders to “urgently unite to implement public policies that prevent this catastrophic situation.” It added the issue of skills shortages is the greatest challenge the sector has faced in the trade body’s 45-year history.

“Innovation processes arise from the existence of problems. Given the size of this problem, however, the collective action of all the actors involved is essential”, the manifesto noted.

Source: NewsNow

https://www.newsnow.co.uk/h/Business+&+Finance/Economy/International/Brazil

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Steel consumption grows 23% in Brazil in 2021

Top 5 Application Areas In The Steel Industry - Belzona Blog

The country’s steel industry ended 2021 with strong growth in volume of crude steel produced, domestic sales and apparent consumption, as expected, despite the sharp deceleration of indicators in the last month of the year. The data are from the Instituto Aço Brasil, which represents steelmakers.

In a year marked by strong domestic demand until July and an increase in exports in the second half of the year, steelmakers in the country produced 36 million tonnes of crude steel, up 14.7% from 2020. In rolled products, the sector reached 26 million tonnes, up 19.3% year over year.

The performance was also robust in domestic sales, which totaled 22.4 million tonnes, up 15% year over year. In the year of the pandemic, the sector was impacted in the second quarter, but saw strong steel sales from July onwards.

Also with a record, since 2013, apparent consumption (local sales plus imports) of steel products totaled 26.4 million tonnes, up 23.2% year over year.

Faced with a heated market and difficulties in meeting all demand from local mills, imports of finished material grew by 144% in the year, totaling 5 million tonnes.

With an increase in steel production and an accommodation of domestic demand – which was supplied from the middle of the year with domestic supply and the entry of foreign material –, exports rose and ended the year up 3.9%, totaling 11 million tonnes. Benefited from higher steel prices in the international market, they generated $9.3 billion.

In December, indicators focused on the domestic market lost steam due to macroeconomic uncertainties as of September: in the production of crude steel (-11.4%), rolled products (-16.8%), domestic sales (-24.7 %) and apparent consumption (-17.3%). Exports, on the other hand, gained momentum, with an expansion of 74.9% —1.3 million tonnes. Imports continued to expand, with 309,000 tonnes (up 49.9%). Sources say there is still a lot of steel in the ports waiting to be cleared.

Source: Valor international

https://valorinternational.globo.com/

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Asset managers that grow faster in Brazil unveil their strategies

Asset Management: o que é e como utilizar nos ativos

The five asset managers that gained the most clients in 2021 together attracted almost 1.6 million new shareholders to their investment funds. Three of them are “independent” and two are linked to large banks.

XP Allocation Asset Management, linked to XP, was the one that gained the most clients, with 478,700 new members. Then comes the asset management of Nubank, Nu Asset Management, with the arrival of 430,000 investors. The asset managers of Caixa Econômica Federal and Bradesco appear in third and fourth places, but in fifth place comes again an independent company of the big banks: Vitreo Gestão de Recursos, linked to Empiricus (currently of BTG), with 174,000 new investors.

Some factors explain the growth of these independent firms. The launching of alternative products, such as foreign-oriented funds or less talked-about assets like cannabis, water and uranium; low initial minimum contributions; and marketing strategies to draw individual investors.

The survey also shows that the asset management companies linked to the five main retail banks in the country (Banco do Brasil, Bradesco, Caixa, Itaú and Santander) closed last year with 15.63 million members, compared to 15.10 million in 2020 – a 3.5% growth. The other asset managers had a 30% growth in 2021, reaching 8.29 million members.

Valor talked to the five firms that attracted the most clients last year to understand what strategies were adopted and what to expect for 2022.

XP Allocation Asset

The success of XP’s management company, for example, is due to different factors, according to CEO Bruno Castro. The main ones are the launching of products with differentiated strategies and the low initial investment amounts, which brings the company closer to the individual investor, considered by Mr. Castro as “the heart” of the company. “We focus on bringing products that were previously available only to institutional or qualified investors to the other XP clients,” he said.

Some of the main highlights of the year, according to him, were real estate funds and also the launching of exchange-traded funds (ETFs), like XINA11, which follows Chinese stocks. There is also an ETF that replicates the average price of gold.

By being connected to the largest investment platform in the country, the XP manager also has the advantage of the broad base of the broker, which counts on independent agents and investment advisors to help in the distribution of its products. Mr. Castro, however, emphasizes that XP Asset practices “the same rebate rules of the market.” The rebate is a kind of commission paid by the managers to these professionals who resell the funds.

For 2022, the manager says that it will continue to keep an eye on the so-called “thematic funds.” “Our international grid tends to become more robust, with more sophisticated products. We have recently launched water, carbon and internet funds, and we will continue to keep an eye on this,” Mr. Castro said.

Caixa DTVM

The wide distribution network was an asset for Caixa’s growth last year, while higher interest rates helped boost fixed income products.

The bank serves a less coveted slice of the market: the lower income bracket. “We are present in 99.83% of Brazilian municipalities, and the growing number of customers are the main levers of new shareholders,” the state-owned bank’s asset manager said in a statement. “Caixa Asset has structured and positioned itself to meet the needs of the lower income bracket. The products and the way to invest are simple and give returns.”

According to Caixa’s firm, fixed income products were the ones that attracted the most new shareholders throughout 2021. One reason was the increase in the Selic, Brazil’s benchmark interest rate. This contributed to increase the yield of this class of assets, since many fixed income products have their variation tied to the Selic. Another possible reason was the debut of Caixa’s insurance unit Caixa Seguridade on the stock exchange. According to the bank, “new investors came to the customer base through the initial public offering.”

Fixed income and credit strategies are the focus of Caixa’s asset manager for this year, the bank said.

Bram

Bradesco links the growth of its asset management business to two main reasons: the wide range of products, including those coming from partnerships with other assets, and the distribution on different platforms.

Ricardo Eleutério, the asset manager’s director, explains that the firm’s funds are currently available on 16 platforms, which have attracted 64,000 shareholders. “This accelerated a lot in 2021, when we sought partnership with independent distributors and attracted more investors,” he said.

The presence of house funds on partner shelves, however, is not the only reason for the result. According to Mr. Eleutério, Bram’s own shelf also justifies the arrival of new shareholders. He says that the firm has a very diverse menu of funds and, therefore, is able to meet the most diverse types of profiles in different scenarios.

“In 2020, we saw a lower interest rate, which made investors look for multimarket and equity funds. And we had many options of these products. Last year, with higher interest rates, the demand started to be for fixed income funds and even with a certain risk, such as private credit funds, for example. And we also had funds,” he said.

According to the executive, in the last two years the management company greatly accelerated its offer, as was the demand from the public. One path for this was partnerships with other firms, including international ones.

“We accelerated the offer with new products, alternative strategies and increased the product grid locally and also abroad,” he said. “We made many exclusive partnerships abroad. Where we didn’t have a presence, we started to have one. We were not in Asia, for example, so we made partnerships with managers bringing funds from Asia. For 2022, we believe this trend will continue and we will continue to do more partnerships.”

Nu Asset

Nubank’s fund manager links its growth to the ease of use of its digital platforms, through which investors can invest simply and on their own. According to Andrés Kikuchi, leader of Nu Asset, the company makes every effort to present the available products in a clear way to investors to facilitate their understanding and decision making.

“With simple language and investments starting at R$1, the process is 100% guided through an application to define profile, amount to be invested, monitoring and redemption request,” says the executive.

Currently, the company has five funds available in the Nubank app or on the NuInvest platform. The product Nu Seleção, for example, is made up of multimarket funds composed, in different proportions, of assets such as fixed-income securities, stocks in Brazil and the United States, gold and dollars.

The funds with the largest number of shareholders are Nu Seleção Cautela, with 236,000 shareholders, followed by Nu Seleção Equilíbrio and Nu Seleção Potencial, with about 86,000 and 85,000 shareholders, respectively.

The accumulated profitability from March last year until December for Nu Seleção Cautela was 3.34%, while that of Nu Seleção Potencial was 2.19%, and that of Nu Seleção Equilíbrio, 2.51%. As a reference, the interbank deposit rate (CDI) in 2021 was 4.42%, while Ibovespa fell almost 12%.

Vitreo

The other successful asset manager is Vitreo. The rise in the number of shareholders in its funds was explained especially by the launch of different thematic products that were pioneers in the market, according to George Wachsmann, founding partner of the firm. “Since the beginning of Vitreo we have had this idea of bringing the best investment opportunities. Many of them sometimes are not available to clients in general, or even to anyone in Brazil, and this was accentuated last year,” he said.

The executive says that the last launch of the firm was a metaverse investment fund, which invests exclusively in companies that have the so-called metaverse as a business. “This fund alone attracted 10,000 shareholders,” he said.

Another example was the launch of a fund that invests in uranium, which already gathers 9,000 investors and had a 50% increase last year.

In order to hasten and make launches that are appealing to the public, with the potential to appreciate in the market, Vitreo relies on the partnership with the analysis company Empiricus, which, just like the asset manager, now belongs to BTG Pactual.

Source: Valor international

https://valorinternational.globo.com/

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Regional development bank will receive $100m loan from AIIB

China-Led Asian Infrastructure Investment Bank Approves First Loan to India - Caixin Global

The Asian Infrastructure Investment Bank (AIIB) approved its first credit operation for Brazil, in the amount of $100 million for the Minas Gerais Development Bank (BDMG). This comes four months after Brazil became an effective partner in this China-led, Beijing-based multilateral development bank.

The funds are expected to be available to BDMG in three tranches between 2022 and 2024, to create lines of credit for companies. There is no size limitation for tapping the line. However, due to the characteristics of the operation, the funds are expected to be allocated especially in medium and large companies.

BDMG’s CEO Sérgio Gusmão Suchodolski celebrated the fact that the institution was AIIB’s first partner. “We believe that this pioneering operation will be strategic to accelerate the efficient mobilization and allocation of funds to finance sustainable development projects, using the broad bases of the BDMG, which is a last-mile development bank.”

“This partnership strengthens the role of Brazil, which has joined the other members of the Asian Bank in designing a new international financial architecture that will be key to meeting the challenges of development in emerging economies, in order to build a more sustainable world in this century,” the executive added.

AIIB’s credit operation is the first with Brazil and the second in Latin America (there was a previous operation with Ecuador). It is also the first operation in Latin America with a non-sovereign entity.

The first contacts between BDMG and AIIB to carry out this loan were made in December 2020. However, since 2019, Mr. Suchodolski, who leads the Brazilian Development Association (ABDE), which brings together 31 firms in the sector, had been carrying out efforts to make sure that Brazil would be a founding member and partner of the AIIB, noting that this opened up opportunities for access to a new source of multilateral funds.

The accession agreement was finally enacted in September 2021 by the Brazilian government. The country contributed $1 million to the bank’s capital. On the other hand, the expectation in government circles is that Brazil will have access to up to $350 million in financing.

There are two general eligibility criteria for allocation of the funds approved on Thursday. First, investments in global public goods (like renewable power) are eligible. It means that coal-related projects, including coal mining, coal transport or coal-fired power plants, as well as infrastructure services dedicated solely to supporting any of these activities, cannot be financed. Large dams cannot be financed either.

Second, the funds could be used for operations that foster trade and connectivity with Asia. In the case of connectivity, it is understood as operations in which the parent company (or economic group) is of Asian origin (that is, some regional member of the AIIB) or operations that contribute to activities that encourage trade in products between regions Minas Gerais-Asia, with a direct or infrastructure-related relationship.

In addition to the $100 million credit, a $1 million donation was approved for BDMG by the Multilateral Cooperation Center for Financing for Development, a mechanism that aims to foster high-quality infrastructure investments and connectivity in developing countries through partnerships.

Source: Valor international

https://valorinternational.globo.com/

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