Emerging markets are not everyone's cup of tea. There's something to be said for staying at home and investing in companies that matter in our everyday lives. It's a safe and steady approach and investment managers have a hard time advising their clients otherwise.
That's understandable. It takes a certain type to place their money abroad, someone a little adventurous, I suspect, who is looking for the big score, and is prepared to accept the risk that comes with an overseas market in a different time zone, on another continent, with an unfamiliar currency, where anything from an overnight military coup (think Honduras), political instability (think Romania), or a scam (think Bre-X) can wipe out their investment while they're asleep. Definitely not something you want to wake up to.
Most Canadian investors prefer to seek out multinational corporations closer to home in Manhattan. Over the long term, America's corporates have delivered the goods with the nastiest surprise occasionally coming from a surging Canadian dollar that bites into dividends.
When overseas interest has beckoned, it generally focuses on a diversified mutual fund, heavy with European or Japanese names. South America seldom gets a look.
That changed last week when Rio de Janeiro was awarded the 2016 Summer Olympic Games. Coming on the heels of Brazil being awarded the 2014 FIFA World Cup of soccer, investment managers were left furiously speculating how beneficial the world's two biggest sporting events two years apart could be for the country's economy.
For the longest time, Brazil, resource-rich, and a major exporter of metals, minerals and commodities, with vast offshore oil reserves in which it is investing $150 billion, has been viewed as the country of the future. With a population of 190 million, it is now a centrist-based consumer society that is being driven by higher income levels and easier access to credit.
Bank of America-Merrill Lynch chief economist Virgilio Castro Cunha offers a rosy outlook. He estimates corporate earnings growth will jump 26 per cent next year, driven by robust domestic activity and a soft recovery on commodity and volume prices. He has raised his 2010 growth forecast to 5.3 per cent from 4.5 per cent.
The Bovespa stock index, based in Sao Paulo, the Brazilian equivalent of the S&P/TSX composite index, has about 60 listed companies and is the largest capitalized stock market in Latin America.
The index is trading at a 15-month high and is the best performing index in the world this year with a return of 67 per cent.
Factor in the strength of the currency, the real, and the return for a Canadian investor is closer to 100 per cent, so investing in Brazil may not be such a nutty idea, after all.
Brazil is the "B" in the BRIC group with Russia, India and China, considered to be the fastest growing developing economies, and there are mutual funds, such as the Templeton BRIC Corporate Class Fund, that serve this market.
"When it comes to growth and investment value, Brazil has become the BRIC's ignored fourth wheel," says Danny Furman on the investment site SeekingAlpha. com.
"Russia has ridden the oil roller coaster and most studious emerging market investors have focused on China's huge stimulus package and increased consumption as well as India's political shift. Brazil is assumed to have garnered equal attention, given the country's acronym leading position, but volume and price simply don't agree.
"Brazil's economy, from all indications, might be the best poised in the world. Bank balance sheets are relatively clean and consumption is at an all- time high in what has traditionally been an export-reliant economy. Power and water usage are up and favourable trade terms with China are apparent."
In fact, China has supplanted the U.S. as Brazil's biggest trading partner.
For Canadians, American Depositary Receipts (ADRs) that trade on the New York Stock Exchange offer the most immediate hands-on investment. There are about 35 ADRs and most of them are internationally recognized names. They include steelmaker Gerdau S.A. (GGB), mining giant Companhia Vale do Rio Doce (VALE), state-controlled oil and gas company Petroleo Brasileiro S.A., better known as Petrobras (PBR), giant soft drink distributor Companhia de Bebidas das Americas, known as Ambev (ABV), Cosan, an independent ethanol producer (CZZ), Brasil Telecom (BTM) and Bombardier rival Embraer (ERJ).
The iShares Brazil Index ETF (EWZ) that tracks the Bovespa offers diversification. Units that last November dropped to a 52-week low of $26.64 US have surged to $69 US, an increase of 159 per cent.
That doesn't surprise Castro Cunha.
"Brazil is trading at a 14-per-cent discount to global equities on consensus industry-adjusted 12-month forward, price-earnings (P/E) multiples," he points out. "Higher perceived sustainable growth should encourage investors - it is trading at six-per-cent and three-per-cent discount to China and India, respectively, based on consensus-forward price-earnings (P/E) ratios."
What portion of one's portfolio should be placed outside Canada? Clearly this depends on an individual's risk tolerance, but investment firm Edward Jones recommends between 25 per cent and 35 per cent.
"In our view, global mutual funds with broad exposure to developed and emerging equity markets are a good choice since they have the flexibility to select investments that remain undervalued and to shift their holdings in response to changing opportunities," it says.
http://www.canada.com/Sport+spectaculars+could+also+draw+investors+Brazil/2086801/story.html
Showing posts with label olympics. Show all posts
Showing posts with label olympics. Show all posts
Sunday, October 11, 2009
Tuesday, June 24, 2008
São Paulo Want Hernanes Future Resolved
São Paulo are unhappy that Barcelona will not make a final push to sign Hernanes or leave him alone because they believe the speculation is unsettling him.
The highly-rated midfielder starred in Brazil's pre-Olympic Games encounter against a Rio de Janeiro select side and is set to travel to Beijing for the tournament in August.
Before then, however, Barça's interest has caused him unrest and since making a second offer of €12m that was refused, the Blaugrana have not made contact.
"I know that it is very that people keep saying he could be going and nothing is decided," bemoaned São Paulo coach Muricy Ramalho, Sport report.
"I just hope that a firm offer arrives so that he can go abroad, but it is making him dizzy that he is being told one thing and then another."
The Brazilian club have insisted that they will not accept less than €25m for Hernanes' services, but an offer of around €15m should bring them to the negotiating table.
Barcelona are keen on the playmaker, but have not made a final push because they are still pursuing Aleksandr Hleb and will not sign both players this summer.
http://www.goal.com/en/Articolo.aspx?ContenutoId=747820
Tuesday, May 20, 2008
Galliani: No Olympics For Kaka
Milan general manager Adriano Galliani has made an official declaration, confirming that Kaka will not be allowed to represent Brazil at this summer’s Olympics, however Alexandre Pato will be permitted.
All teams participating in the Olympic games in Beijing are allowed to select three players over the age of 23, and there have been strong calls for Kaka to be chosen for Brazil.
Milan have now made it perfectly clear that they will refuse to allow the European and World Footballer of the Year to be selected.
A statement from Adriano Galliani on ACMilan.com reads: "Ahead of the Chinese Olympic games, Milan confirms that they will allow the under 23 players like Alexandre Pato and Rodrigo Digao, who are currently in the pre-list of the called-up players, to take part.
“However, Milan will not allow this permission to an over-23 player like Kaka for the simple reason that the Brazilian champion is already part of the Brazilian national team.
“The Rossoneri's club does not believe that it is fair that Kaka is included in the official games of the Brazilian Olympic national team."
Kaka has stated in the past that he would like to play in the Olympics.
http://goal.com/en/Articolo.aspx?ContenutoId=702520
Tuesday, March 4, 2008
Brazilian squad stays in Olympic Villa
The president of the Brazilian Football Confederation, Ricardo Teixeira, informed that his National squad towards Beijing 2008 will stay with the rest of the athletes.
The director warned that the Brazilian squad which will compete at Beijing Olympic Games 2008 will stay in the Olympic Villa and will have to accept the same treatment granted to any other athlete, without the privileges of previous editions.
"The players will have the same treatment athletes of other fields are offered," the president of the Brazilian Football Confederation (CBF), Ricardo Teixeira, sentenced, on an interview published by O Globo.
"I've already tried some other ways (offering privileges and special treatment) and it didn't work. In Atlanta 1996 we had the best squad, the delegation stayed in the best hotels, we spent 5 million dollars, and we lost," Teixeira added.
Capturing the Gold medal, the only relevant trophy missing from the Brazilian soccer record, has turned into an obsession, among other, for Teixeira himself.
Thursday, January 10, 2008
Olympics: Brazil hoping to host Games
Olympic Games
Brazil are to put in a bid for the 2016 Olympic Games, on the back of their confirmed role as host of the 2014 World Cup soccer finals.
Officials in Rio de Janeiro say the city will lay much of the groundwork for the Olympics when it prepares for the global soccer extravanganza.
The city will spend just US$508 million ($672.8 million) to get ready for the Olympics -- far less than the US$1.5 billion that London is projected to spend on sports venues for the 2012 Games.
The Brazilian Olympic delegation will present Rio's bid to the International Olympic Committee on Friday at its headquarters Lausanne, Switzerland.
The IOC will announce the host city in October 2009 at a ceremony in Copenhagen, Denmark.
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