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’The real Brazilian real
Just how overvalued is Brazil’s real — the currency at the centre of the country’s new capital controls?
By 31.3 per cent, according to Standard Chartered’s Mike Moran and Douglas Smith, who have just cut their short-term recommendation on the South American currency to `underweight’.
Brazil nuts? The country’s new capital control
Late on Wednesday Brazil — land of impressive football and interest rates — announced a further development in its controversial capital controls.
From the Wall Street Journal:
BRASILIA—Brazil’s government will apply a tax on Brazilian stocks traded as American depositary receipts,
Blowing emerging bubbles
Risk appetite is back, and with it, the search for yield in emerging markets.
According to the WSJ, US investors have pumped roughly $26bn into emerging-markets funds this year, $15bn of which was invested via exchange-traded funds.
Brazil – more taxing issues
Brazil may well be, as Lex puts it, a “victim of its own economic success”.
But its surprise move to impose a 2 per cent flat one-way tax on all new capital inflows this week has also drawn howls from portfolio investors – and some more warnings about the broader implications.
Brazil taxes foreign portfolio flows
Brazil’s currency and stocks fell sharply on Tuesday after the government imposed a 2% tax on foreign portfolio investments to stem the rapid rise of its currency. The move, announced shortly before local markets closed on Monday,
Bubble management, Brazilian style
Brazil’s IBOVESPA equity index fell an eye-catching 3,155 points at one stage on Tuesday.
That, of course, amounted to a setback of just less than 5 per cent, taking the index down to 64,076 — Brazil’s high-five-figure corporate indicator being a hang-over from past bouts of hyper-inflation.
An own goal in Brazil’s capital controls?
Whoops, so much for that Olympics-inspired Brazilian ETF effect.
Brazil, land of football and painful female grooming, has just imposed a tax on foreign investments in the country.
From the FT:
Brazil has imposed a 2 per cent tax effective from Tuesday on money entering the country to invest in equities and fixed income instruments.
The SDR effect on the dollar, and gold
Here’s a small sample of what the world’s central banks are doing with their newly inflated SDR reserves.
Mexico, via Bloomberg:
The $4 billion in special drawing rights Mexico is getting from the International Monetary Fund is providing the central bank more room to continue selling dollars while reaching its goal of ending this year with international reserves around last year’s levels,
Lex: Santander
Santander has done well in turning around its Brazilian bank, but is it time to cash out?
Santander’s decision to issue new shares equivalent to a 15 per cent stake in its Brazilian bank has therefore fuelled concerns that Spain’s biggest bank may secretly need more capital.One explanation is that Santander’s chairman,
Flows into emerging market equity funds hit 18-month high
Funds dedicated to emerging market equities attracted some $4bn of investor cash during the week to June 03, according to data from fund tracker EPFR.
Michael Hartnett, chief global equity strategist at Merrill Lynch,
Chop, chop, chop the dollar
The FT reported on Tuesday that Brazil and China have come one step closer towards dropping the dollar in trade transactions in favour of their own currencies. Brazilian president Luiz Inácio Lula da Silva is currently visiting Beijing on a state visit.
Brazil gives go-ahead to aid
Brazil’s government-controlled banks have been given the green light to help prop up financial institutions owed money from companies that have made bad bets on the country’s currency amid growing concerns about the level of exposure.
Emerging (markets) squeeze
Speaking of emerging market economies in the 1990s, we may be having a repeat.
This is from Sean Corrigan, chief investment strategist at Diapason Commodities Management.
Public sector surpluses
Brazil: let the floodgates open?
A relatively little-reported (at least from English-language sources) snippet late Thursday: Brazil has received a second upgrade to its government debt.
At the end of last month, S&P shifted the country’s rating up to investment grade,