Brazil Economic Scan | 5 May 2009

5-May-2009

Brazil Economic Scan

In this edition: Brazil's GDP may shrink less than previously forecast, Brazil April trade surplus widens to $3.71 bln, BlackRock bets on Brazil, Claro to grow faster than Brazil rivals in 09, Bovespa rises above 50,000.

Top headlines

Brazil’s GDP May Shrink Less Than Previously Forecast

• Analysts expect Latin America’s biggest economy to shrink 0.30% in 2009, compared with a previous forecast of a 0.39% contraction a week earlier, according to the median estimate in an April 30 central bank survey of about 100.
• In the bank’s April 17 survey, economists forecast a 0.49% contraction for 2009.
• The real gained 1.4% to 2.1443 per dollar at 9:43 a.m. New York time from 2.1740 on May 1.

Brazil April Trade Surplus Widens To $3.71 Bln

• Brazil's foreign trade surplus widened in April to $3.71 billion from $1.77 billion in March as imports continued their sharp fall on a sluggish local economy.
• The April figure was higher than analyst expectations. A Dow Jones poll of 12 analysts predicted an April trade surplus of $2.84 billion. The surplus in April 2008 was $1.74 billion.
• In April, Brazilian exports were $12.32 billion, down from $14.06 billion in April 2008. Imports were only $8.61 billion, down sharply from the figure of $12.32 billion in April a year ago.

BlackRock bets on Brazil, warns about Mexico

• BlackRock is overweight Brazil by about 6 to 7 percentage points, according to MSCI's Latin America index, a regional benchmark, and underweight Mexico by 3 to 4 percentage points. Brazil makes up about 65% and Mexico 22% of the index.
• "Clearly for us, over the last six months, Brazil has been our preference over Mexico," said Will Landers, a managing director at BlackRock, who oversees about $4 billion in regional equities.
• Brazil has soared almost 33% so far in 2009, widely outperforming regional peers such as Mexico, which is down 2%, and Chile, which is up 20%, according to MSCI country indices.

Claro to grow faster than Brazil rivals in 2009

• Claro's customer base is up 27% from the first quarter of 2008. Net income grew 5.8% in the first three months of 2009 from the same period a year earlier, the company reported on April 29.
• Claro's 25.8% market share compares with Vivo's 29.7%. Brazil has 153.7 million mobile phone users, according to Anatel, the country's telecommunications regulatory agency.
• Claro's parent company, America Movil, is controlled by Mexican billionaire Carlos Slim, the world's third-richest man.

Bovespa Rises Above 50,000 on Commodities Outlook; Bolsa Gains

• The Bovespa jumped +6.6% to 50,404.53. Markets across Latin America rallied with those in Mexico and Argentina surging more than 5% in the first day of trading since the May 1 holiday. The MSCI Latin American Markets index rose 8.9%, the most since Dec. 8.
• Foreign investors bought 3.1 billion reais ($1.5 billion) more in stocks than they sold last month, the largest monthly net inflow since April 2008, according to data compiled by the Sao Paulo-based exchange BM&FBovespa SA through April 28.
• The currency strengthened +2.5% to 2.1196 per U.S. dollar, from 2.1740 on May 1. The yield on Brazil’s zero-coupon bonds due January 2010 rose five basis points, or 0.05 percentage point, to 9.82%. Vale +8.8% to 33.15, Petrobras 7.1% to 31.63 reais, Gafisa +11% to 20.90 reais, Cyrela Brazil Realty +14% to 15.30 reais, Rossi +10% to 8.15 reais.