Time to Look to Brazil for Bargains?

Time to Look to Brazil for Bargains? By Adam Patterson The expression "may we live in interesting times" could have been written with the principal Brazilian stock market, the Bovespa, in mind. It's performance since 2010 – when the author moved to the country – has been a rollercoaster ride. Six years ago with BRIC-mania at its height, the economy was growing at over 7% a year, the recent investment grading was driving FDI and Petrobras, the national oil champion, launched a $70 billion IPO, which is still one of the biggest in history. With these macro drivers and a new found confidence after years of relative under performance, equities saw an extensive uptick. So what happened next? The short answer is that a series of acute headwinds, such as commodity price falls, stagflationary pressure, large fiscal deficits and political turmoil, battered the country. Average GDP growth slumped to an average of just over 1% between 2012 and 2014 (with inflation averaging 5% a year over the period) and a close to 4% nominal deceleration in 2015. Moreover GDP in the first quarter of this year fell by a further 0.3%, which was the fifth consecutive quarterly contraction. That, ladies and gentlemen, is approaching the definition of depression level economics. This macro picture was absorbed and reflected in the performance of the Bovespa. Brazilian equities fell by 25% between 2012 and 2015, with annual volatility over this period of 22%. Add in the relative fall in dollar terms – the USD/BRL rate shot up from 2.05 to 3.96 between 2013 and 2015 – and a dollar based investor had almost five years of gains wiped out. Interesting times indeed. The depreciation in the Real, driven by the myriad economic stress factors mapped above, was closely correlated with broader weakness in Bovespa performance... Click Here To Read The Full Story The Master Investor Market Report The FTSE 100 closed the day at 6,695.42, an increase of 26.18 points. The FTSE 250 rose 140.39 points to finish at 16,867.66. The FTSE All Share climbed 16.51 points to finish at 3,623.23. The FTSE AIM All Share finished at 727.43, up by 3.21 points. The board of FTSE 100 microchip manufacturer ARM Holdings (ARM) has recommended that a takeover offer of 1,700p in cash per share, valuing the business at £23.4 billion, be accepted. The approach from Japan's SoftBank includes assurances that the UK headcount will be protected and it intends to leave the current senior management team and organisational structure in place. ARM shares climbed 486p to 1,675p. Download our July issue today! Click HERE to read. Alcoholic drinks wholesaler Conviviality Retail (CVR) reported that revenues during the year ended 1st May climbed 137% to £864.5 million after it purchased a number of competitors. The integration of all three of the company's recent acquisitions is proceeding well. Statutory pre-tax profits climbed to £0.1 million and management are looking ahead to stronger results in the current financial year. Conviviality shares rose by 10.1% to 196p. AIM-listed speciality bakery Finsbury Foods (FIF) said that it continued to perform well during the second half of the financial year ended 2nd July, with total sales up by 24% at £319.7 million as the company successfully integrated Fletchers and Johnstone's. The firm believes it is well placed to deal with any challenges arising from Brexit. Finsbury Foods shares fell by 0.50p to 114.50p. Tomorrow's news today Royal Mail (RMG) will release a trading statement. 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The share price is well supported by 350p of net assets commanding an enterprise value of around 520p a share… Click Here To Read The Full Story Zak's Weekend Chart Round-Up By Zak Mir FTSE 100 Stocks Barclays (BARC): Risk of another Major Support Test Given all the rumours surrounding the state of European banks, with the German and Italians especially in focus, the recent revival of the UK counterparts seems all the more welcome… Click Here To Read The Full Story Mr Carney Upsets the Markets (Again!) By Victor Hill July 15.  St. Swithin's Day.  An ancient British folk-tale holds that if it rains today, that will set the weather for another 40 days.  As I have argued before, meteorology and economics have much in common.  Perhaps economists would be better forecasters if they just ignored the central bankers… Click Here To Read The Full Story Join the movement on social media: Copyright 2016 Master Investor Ltd, All rights reserved. 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