| Author |
Brazil Replies |
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
 Posted: Fri Feb 05, 2010 1:54 pm Post subject: |
 |
|
Well....now it's just a question of how to get out. Brazil best argument yet that this is a china story. If there was a way to get that liquidity out of the mother ship (eg. copper) it was done. How much got into "safe hard-asset brazil?" How much got into us?
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
 |
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
| Posted: Wed Nov 04, 2009 3:45 pm Post subject: |
|
|
The ADR runaround:
| Quote: | | Investors continue to grapple with the 2% front-end tax BRL purchases for bond and equity investments. One might expect that the efficiency of the market is such that arbitrage will keep the ADR in line with what one would pay for the local shares. This does not seem to be the case, making the ADR a potentially viable alternative to the local shares. Here is our work using Petrobras as an example. 1. Each US ADR is worth two local shares. The local shares are trading around BRL41.4. Using an exchange rate of BRL1.7285 =$1 that means that each local share is worth about $23.95. If a foreign investor wanted to buy it, they would pay $23.95 plus 2% or $24.43. 2. The ADR should trade for twice that or $48.86. But the ADR is trading around $47.91. Excluding the 2% tax, fair value would be $47.90. Although analysis needs to be done on the stock specific level, but in our look at Petrobras ADRs, it looks cheap relative to the local shares. This is not meant to be the final word. Rather the point of the exercise is to see if the ADR can be a viable alternative to the local shares in minimizing the exposure to the new tax. |
Chandler
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
| Posted: Thu Oct 29, 2009 8:55 am Post subject: |
|
|
| Quote: | Marc Chandler
More Thoughts on Brazil
10/29/2009 9:30 AM EDT
Brazil's 2% IOF tax comes as a wave of profit-taking weighs emerging markets in general. The MSCI EM index is off nearly 8% since Oct 20, while the Brazilian Bovespa entered "correction" territory yesterday with a cumulative decline of a little more than 11% in the same period. In the last 5 days, net-net the Brazil real has slipped about 2.4% against the dollar. From its low on Monday near BRL1.70, through yesterday's high, the dollar appreciated almost 4.7%. This underscores the point we initially made that the volatility of the Brazilian real is sufficiently high as to quickly offset the cost of the 2% tax. Investors continue to seek ways to avoid the tax. Some investors are looking at some structured product whose return is tied to BRL's performance without having to buy the BRL itself. The largest non-government bank in Brazil is reportedly offering through its European unit three-year structured notes that may yield 10.5%. These would be dollar-denominated notes where the interest and principal payments would fluctuate with the BRL. Some fixed income investors are considering buying Brazil's dollar-denominated bonds and getting the currency exposure through the offshore non-deliverable forward market. Some equity fund managers are exploring the liquidity of Brazilian ADRs. The average (20 day) volume of Petrobras ADR in NY is just shy of 14.6 mln, for example, or Gerdau, the steel company's ADR has an average (20 day) volume of about 8.5 mln shares. These are not meant to be equity recommendations but rather simply to illustrate the liquidity of some Brazilian ADRs. Lastly, we have talked with some longer term investors who see the 2% tax presenting them with new opportunity to by Brazilian assets on a pullback as some of the short-term (hot) money exits. |
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
| Posted: Tue Jun 05, 2007 9:33 pm Post subject: |
|
|
Euro/Swiss may be leading but closer to the periphery Brazil is showing some weakness. After selling Real the last month or two it now comes naturally.
http://www.bloomberg.com/apps/news?pid=20601086&sid=awjU2MRCCFXQ&refer=latin_america
4 central banks, including Brazil, meet this week. Watch Swiss hike next.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
| Posted: Mon Jun 04, 2007 9:49 pm Post subject: |
|
|
The Bovespa has now even outperformed Shanghai itself since the end of the brief global markets turmoil in early March. Since then, the Bovespa is up 44 per cent in dollar terms – while the Shanghai Composite is now up only 33.5 per cent.
_________________
Today is the Tomorrow you worried about Yesterday! |
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
|
| Back to top |
|
|
HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11723
Location: Los Angeles, California
|
|
| Back to top |
|
|
rffrydr
Moderator
Joined: 30 Oct 2005
Posts: 16929
Location: Sunny California
|
|
| Back to top |
|
|
Please log in to view without the ad banners |
|
|
FAQ
Search
Memberlist
Usergroups
Statistics
Register
Profile
Log in to check your private messages
Log in
