Brazilian state lender Caixa Econômica Federal has chosen the bank syndicate that will manage the initial public offering (IPO) of its insurance unit. Morgan Stanley will lead a 10-bank syndicate that expects expect to value it at around 60 billion reais ($14.77 billion). Caixa CEO Pedro Guimaraes wants an IPO in the short term, in March or April.
The Natura Group has completed the purchase of Avon Products and the company’s board of directors approved the incorporation of the US cosmetics manufacturer, in a deal that created the world’s fourth-largest beauty group and valued its 130-year-old US rival at approximately US$2 billion. Natura &Co will now have annual gross revenues of over $10bn and a total of 40,000 associates in over 100 countries.
The US Department of Agriculture (USDA) forecasts a record soybean crop in Brazil for the 2019/20 year, at 123.5 million metric tons (mmt). Their latest report on the Brazilian oilseeds market predicts that there will be 44mmt of soybeans destined for processing meal and oil. Meanwhile, the latest forecast from the World Agricultural Supply and Demand Estimate (WASDE) forecasts the US soybean harvest will be less than 100 mmt in 2019/20, a drop of almost 20% on the previous season.
Brazil last year had a historic performance in agricultural commodities exports, shipping record quantities of beef, cotton, corn, coffee and soymeal. Soybean and poultry exports reached the second largest volumes on record (78mn metric tons (t) and 3.8mn t). Exports of corn were 88% more in comparison to the prior year, cotton 69%, coffee 19%, beef 13%, and pork 16%.
Brazilian retailer GPA renovated a total of 20 Pão de Açúcar supermarkets in 2019, following the roll-out of a new store format in September 2019. As a result of the format changes, the stores have seen growth across all performance indicators; a 9% increase in sales, 7% in volume and 5% in the number of customers. The project will continue in 2020, with the opening of 10 new stores in locations with potential for expansion, while another 15 existing stores will be remodelled.
The IHS Markit Brazil manufacturing purchasing managers index (PMI) came in at 50.2, a sharp drop from 52.9 in November and the slowest pace of expansion since July, almost to the point of stagnation. Employment shrank and new export orders slumped to their lowest in over a decade. “This indicates that the sector has only made a marginal contribution to economic growth in Q4,” said Pollyanna De Lima, principal economist at IHS Markit.
Brazil’s trade surplus shrank 20% to $46.67 billion last year, the smallest since 2015 ($19.5 billion), amid one of the most severe recessions in the country’s history. According to data released by the Economy Ministry total exports in 2019 were $224 billion and imports were $177.3 billion. Trade Secretary Lucas Ferraz said that surplus in 2020 could be even smaller, as strengthening domestic demand lifts overall economic growth to around 2.3% and spurs imports more than exports.
Brazil stocks jumped 2% on Thursday to begin 2020 scaling new highs. Iron ore miner Vale was one of the major drivers on Sao Paulo’s commodity-heavy Bovespa index, while the biggest boost came from financial exchange operator B3, which rose nearly 5% after announcing reduced and simplified trading fees. Brazil’s real, however, reversed early gains and lagged regional peers against a strong dollar.
Economists predict that President Jair Bolsonaro’s pro-business policies will finally deliver a long-awaited recovery in Latin America’s biggest economy, boosting growth to 2.0-2.6 per cent in 2020 from around 1 per cent this year — although they concede that a similarly optimistic forecast for this year has failed to materialise.
Former senator and two-time governor of Matto Grosso, 63-year old billionaire Blairo Maggi, has been instrumental in the growth of Brazil’s agribusiness sector. He remains a leader of the “ruralist bench”, the agribusiness lobby that dominates Congress and supports President Jair Bolsonaro. In an interview with Al Jazeera, Maggi says that it is possible to increase Brazil’s agribusiness in a sustainable way.