• bbaknjs

    Brazilian Banks: The Worst Is Behind, But Caution Still Advised

    In face of the still-challenging macro outlook in Brazil, investors still wonder whether the worst, in terms of loan provisioning, has indeed passed, we believe that is likely the case.

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  • people-widmill2

    Mexico’s Renewable Energy Revolution

    The national and international attention paid to Pemex and the oil sector has eclipsed the other half of the reform with a greater potential. In March, the government bought 2.1 GW for $2.6 billion, which will be installed by 2018. In September, it will seek to buy between $2.6 to $2.8 billion more. Starting in 2018, qualified consumers (big energy consumers that but directly in the new power market) will have to show that they consume at least 5% from clean sources.

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  • amlotrump

    “Mexican Trump” Noise

    The possibility that AMLO wins in 2018 is significant. And he, as Trump or Sanders, represents an anti-establishment sentiment that has gained strength in recent years. The historical low approval rates of the president finally manifested themselves in the recent local elections on June 5.Although the “U.S. Trump” is the biggest concern for the economy in the short term, the “Mexican Trump” could bring more noise in the long run.

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  • oil-e1466682809284

    Latin America’s Oil Output Shocks

    Latin America’s major oil producers have seen declines of almost 400,000 bpd y/y. Without Brazil, production trends in the region would be more dramatic.

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  • pedro-pablo-kuczynski

    Peru: Is PPK’s Government Plan Sound Economics?

    Pedro Pablo Kuczynski’s plan of 5% GDP growth by 2018 strikes as being overly ambitious, and the means to achieving it is not clear. Peru’s new government has the advantage of inheriting a country with positive inertia and a sound macroeconomic standing. The true size of the gap between political rhetoric and policy- making reality will become clear soon enough.

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  • energy-oil-pumps-2

    Investment Opportunities in the Mexican Midstream

    We present a glance of the Mexican midstream following Mexico’s Energy Reform; traditionally closed upstream has drawn a lot of attention from foreign investors; however, the midstream which received less attention, could be significantly more dynamic in the following years with an outstanding potential for investment opportunities.

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  • Source: www.vosizneias.com

    One Hundred Days of Trump: Trade War Implications for Mexico and the U.S.

    Trump is still far from becoming president and his volatile character makes it hard to know what he would do should he ever make it to the White House; however, some of his pledged policies towards Mexico provide a motive to analyze the implications for the U.S.-Mexico economic relation.

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LatAm Economics

pedro-pablo-kuczynski

Peru: Is PPK’s Government Plan Sound Economics?

Pedro Pablo Kuczynski’s plan of 5% GDP growth by 2018 strikes as being overly ambitious, and the means to achieving it is not clear. Peru’s new government has the advantage of inheriting a country with positive inertia and a sound macroeconomic standing. The true size of the gap between political rhetoric and policy- making reality will become clear soon enough.

energy-oil-pumps-2

Investment Opportunities in the Mexican Midstream

We present a glance of the Mexican midstream following Mexico’s Energy Reform; traditionally closed upstream has drawn a lot of attention from foreign investors; however, the midstream which received less attention, could be significantly more dynamic in the following years with an outstanding potential for investment opportunities.

570613_productos_agropecuarios_mexico_inflacion

Why Mexico INEGI´s reported inflation may be understated

A common question for many Mexicans in the past months has been “Why is it that the inflation index (INPC) keeps showing moderate price increases while everyone struggles to make it with the same budget?” We present some of the facts that allow for an explanation of why inflation as measured by INEGI (Mexican Statistics Agency) could be understated.

france-britain-eu-brexit-flag-referendum-economy-g7

Brexit and Latin American Exports

The perception that LatAm as a region is less fundamentally exposed to the Brexit fiasco than other emerging markets is borne out by the data. Brazil and Colombia conduct a large amount of trade with the U.K. and the rest of Europe as a share of their total

Soccer: Mexico at USA

Is Mexico Heading For Recession?

We explain why we think that recession odds for Mexico are higher than most think. Car exports, gross fixed investment and cyclical indicators all stood in recession ground according to latest data. On the policy side, fiscal and monetary tightening are a no-no and we all know Donald Trump will not help ahead if his winning chances spike.

Source: Washington Times

Latin America’s Headwinds: Economic Projections 2016 and 2017

The International Monetary Fund (IMF) updated its economic projections for the world. The Fund describe the months between this and its previous projections (October 2015) as a period characterized by volatility; weak growth in advanced economies; and continued headwinds for emerging market economies. This is the reason why global growth was revised downwards from 3.4% to 3.2% for 2016. Latin America was not the exception going from 0.8% to -0.5%.

Source: sophisticatedinvestor.com

Mexico’s Economic Outlook Update: The Differentiating EM

It has been a difficult period for all emerging markets (EMs). Just today, Moody’s downgraded Mexico’s sovereign debt outlook from “Stable” to “Negative”. Since 2014, due to the falling oil prices, international risk aversion has risen considerably, affecting first EMs. In relative terms, Mexico has been resilient. We reviewed some of the country’s fundamentals.

Source: Forbes

Grading Peña Nieto’s Economic Policy: 62/100, or “C-”

We analyze here ten policy choices of Peña Nieto’s Economic Policy Team since assuming office, focusing more on recent events. We included—despite its autonomy—the central bank. Five categories were pondered. The overall result: so far, the administration is disappointing our expectations.

pic-2-christ-the-redeemer-statue-joins-tis-global-greening-2014-e14390353253551

LATAM Government Debt: Brazil in the Spotlight

Public debt in Latin America has soared since 2008. We picked the seven biggest economies in the region and analyzed government borrowing. Spoiler: debt is increasing rapidly and could force policy makers to cut spending drastically if further FX depreciation is seen.

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The TPP from Mexico’s Point of View

The TPP is a multilateral agreement that establishes a free trade zone among 12 nations: USA, Canada, Mexico, Peru, Chile, Australia, New Zealand, Japan, Malaysia, Singapore, Vietnam and Brunei. We analyzed it from Mexico’s point of view.

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LatAm Sovereign Credit Ratings Snapshot

S&P raised recently Argentina’s long-term local currency rating to B- from CCC+. Still, dollar-denominated debt remains rated as “Selective Default” despite progress being made with U.S. hedge funds to settle a dispute arising from the historic default of 2002. That pending, Argentina is the only Latin American country in default zone, but Venezuela is fast approaching.

The Bank of England is seen, with a statue in the foreground, in the City of London

Why is Inflation Increasing in LatAm?

Despite a global downturn in commodity prices, inflation in most Latin American countries is going up. Mexico and Costa Rica were the only regional outliers in 2015, but still an uptick is expected for both in 2016. Higher consumer prices have already hastened monetary tightening in some countries; a no-no in a recessionary economic environment. Why is inflation increasing? How are central banks responding? We analyzed consumer price dynamics in selected LatAm countries.

Policy and Politics

amlotrump

“Mexican Trump” Noise

The possibility that AMLO wins in 2018 is significant. And he, as Trump or Sanders, represents an anti-establishment sentiment that has gained strength in recent years. The historical low approval rates of the president finally manifested themselves in the recent local elections on June 5.Although the “U.S. Trump” is the biggest concern for the economy in the short term, the “Mexican Trump” could bring more noise in the long run.

47447522-1469133190609574_origin

Venezuela: Default Looms

Summary: Venezuela will likely default in November or April. We present here some of the recent events taking placed in the troubled LatAm economy. The IMF just revised its forecast for Venezuela’s economic growth this week. Economic activity will fall 10% in 2016 – not 8%, as previously stated. Two questions in the air: Will China save Venezuela? Will it demand Maduro to step down?

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Venezuela’s Shock And Impact On LatAm Neighbors

The humanitarian disaster and the increasing social unrest make hard to believe that Maduro’s regime will prove long lasting. But in the meantime, food shortages and starving people are becoming more and more common topics in media articles on cash-strapped Venezuela

Source: La Tercera

The Peruvian Presidential Runoff: The Race to the Center

Keiki Fujimori and Pedro Pablo Kuczynski (PPK) are going to face each other in Peru’s presidential election runoff. Local polls are divided on whether Kuczynski can defeat Keiko on June 5. Only thousands of votes will decide the winner, who will be the one that gets closer to the center in the political spectrum.

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How to Hack an Election, #PanamaPapers and LatAm’s Economic Recession Could be an Explosive Mix

For most Latin American countries, the label of “democracy” is a work in progess. Over recent years, the region has been making efforts to strengthen their institutions in order to consolidate democratic transitions. When one begins to believe in political stability and institutional resilience, then articles such as Andrés Sepulveda’s telling How to Hack an Election and describing how he rigged votes across the region, or #PanamaPapers happen.

Source: History.com

Consequences of China’s Weaker Economic Growth for LatAm

Whether it is a hard landing or not, China’s economic growth is slowing down. This has had and will continue to have implications for the global economy, and LatAm is no exception. However, China’s weaker economic dynamism compromises the growth model of several countries in the region.

Source: El Estimulo

Venezuelan Collapse Poses a Threat to 17 Nations

The market is pricing that Venezuela will default in the coming months. With almost $2 billion in debt due in October, $3 billion in November and almost $4 billion in April 2017; default is only a matter of time. Venezuela’s economic decline will have a regional impact.

Dilma e o presidente da Câmara, deputado Eduardo Cunha

Brazil’s Political Impasse Hurts the Prospects of Fast Economic Recovery

The Brazilian economy will contract 3.6% this year according to the IMF, which will follow an estimated 4% plunge in 2015. The 33% depreciation of the real in 2015 contributed to an annual inflation of 10.7% in December. National unemployment ended the year around 10% and more than 1.5 million jobs were lost. The road ahead does not look promising. Political impasse and uncertainty are hurting the prospects of fast economic recovery.

An electoral propaganda graffiti depicting late Venezuelan President (1999-2013) Hugo Chavez (L), South American independence hero Simon Bolivar (C) and Venezuelan President Nicolas Maduro on a wall of the Petare shantytown in Caracas on December 1 , 2015. Sixteen years into late president Hugo Chavez's leftist "revolution," opinion polls indicate the opposition is poised to win legislative elections Sunday for the first time since the firebrand leader came to power.  AFP PHOTO/FEDERICO PARRA / AFP / FEDERICO PARRA        (Photo credit should read FEDERICO PARRA/AFP/Getty Images)

Going Backwards: The Crisis in Venezuela

Between 2004 and 2008, Venezuela experienced an economic miracle. Its economy grew 10% on average every year, while GDP per capita expanded by 26%. Now Venezuela is going backwards. By 2018, the country will reach the GDP seen in 2005, but with a population 6 million (20% larger).

PolRiskLooms

Political Risk Looms in Latin America

This year will be one of high political risk in the region. The economic deterioration of the Latin America—the International Monetary Fund (IMF) expects a 0.3% contraction this year—has had, and will continue to have, political consequences. This can be seen in the presidential approval rates of the region’s major economies.

Markets

people-widmill2

Mexico’s Renewable Energy Revolution

The national and international attention paid to Pemex and the oil sector has eclipsed the other half of the reform with a greater potential. In March, the government bought 2.1 GW for $2.6 billion, which will be installed by 2018. In September, it will seek to buy between $2.6 to $2.8 billion more. Starting in 2018, qualified consumers (big energy consumers that but directly in the new power market) will have to show that they consume at least 5% from clean sources.

banco-de-mc3a9xico

Latin America’s Search for Yield

Summary: For all countries excluding Mexico, analysts are expecting the reversal of their tightening cycles and are trying to predict the beginning of rate cuts. Even bonds considered extremely toxic could offer an interesting opportunity. Latin America is likely to continue offering attractive returns for the time being in order to compensate investors for the region’s inherent risk.

bogotc3a1_camic3b3n_de_cemex_en_el_sector_de_puente_aranda

Cemex Improves Balance Sheet And Remains Attractive

Cemex (NYSE:CX) has reduced debt and increased profitability enabling a healthier balance sheet. USD exposure is manageable given the higher returns in the US business. Insufficient capacity for competitors in Mexico has allowed CX to regain a portion of the market share lost in recent times as cement volumes increased 12% YoY vs. the industry.

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Mexico’s Real Estate Market Going Public

We present a snapshot of Mexico’s real estate market, focusing on REITs. FUNO, Danhos, Terrafina and Macquarie are the largest FIBRAs in the market and they all went public in the past 5 years, in addition to 6 follow-on offerings. Incentive misalignment and liquidity seem to be the biggest concerns for institutional investors looking at Mexico’s public Real Estate market.

Heatmap Weekly Summary

Sao_Paulo_Stock_Exchange

Heatmap Weekly Summary (July 29)

Mexico’s EWW down 3.3% last week as 2Q16 results disappointed. AMX plunged 8.3% while Cemex rose 10.9%. Brazil´s EWZ continues uptrend posting a weekly gain of 1.2%. VALE ´s results surprised while Ambev missed estimates.

Technical Analysis