Latin America’s future is with selling to Asia, and courting investment from there. India is probably 10-12 years behind China in its relationship with LatAm – its trade levels with the region, about $11 billion now, are equivalent to what China had in the year 2000. With India, LatAm’s bigger opportunity is to court investment in agriculture and energy, and where technology/Intellectual property can be transferred – in IT, light engineering etc.
dnaindia.com

The world’s four biggest emerging economies are grabbing growing volumes of global capital flows, with firms and fund managers increasingly viewing Brazil, Russia, India and China (BRIC) consumer demand as a high-return, relatively safe investment bet.

BRIC, with 40% of the world’s population, account for about 20% of its gross domestic product, a share Goldman Sachs says will rise to equal that of the G7 industrialised countries as early as 2032.

There was a sign this year of the shape of things to come as China overtook the United States as the world’s biggest car market. And as incomes of 2.5 billion people steadily rise, company profits as well as stock markets will feel the effect.

“We are betting on the largest, highest-growth markets with the biggest populations and good liquidity levels.“Already, BRICs are outgunning broader emerging stocks — the MSCI BRIC index is up 90% in 2009 versus 70% for MSCI EM, with only China lagging.

An investment in Brazilian stocks in 2000 would have quadrupled by now while cash put in emerging stocks would merely have doubled. And a buyer of world stocks would have lost money.

Fund managers say cash will go where growth is — or where the value is. With China and India posting the highest growth in the world, and Russia trading at a 40% discount to emerging markets, the bloc should remain an investment magnet.

Consumer demand is seen as key to the post-crisis global recovery, and at the heart of the BRIC story is the consumer.

This is the main driver behind the surging tide of direct investment into the BRICs which took in 16 percent of global direct investment flows in 2008. This is a third up from the previous year, a total $265 billion, or over half of what was received by the 16-nation European Union, United Nations agency UNCTAD says.

Technorati Tags: bric, investment trends, share of world GDP

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WSJ.com

Reliance Industries Ltd., India’s biggest company by market value, said Friday it has agreed with Colombia’s national oil company, Ecopetrol SA , to jointly explore deepwater blocks in the South American country.

The agreement, signed by Reliance’s wholly owned unit, Reliance Exploration and Production DMCC, covers the exploration of the Borojo North Block 42 and Borojo South Block 43 in Colombia.

Under the agreement, Ecopetrol will get a 20% stake in the blocks. Reliance will hold the remaining stake and will also operate the blocks, the company said.

Colombia is one of the countries in which Reliance has 14 of its overseas blocks. The other countries are Peru, Yemen, Oman, Kurdistan, East Timor and Australia.

Technorati Tags: reliance, colombia, oil exploration, peru

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WSJ.com

“Without question, we have steadily increased our exposure to emerging markets over the last couple years, and I think that’s a trend that continues,” said Bill Quinn, executive chairman of American Beacon Advisors, which manages about $65 billion in pension assets and short-term cash assets on behalf of its affiliate, American Airlines, and outside clients. “Most [US] pension funds have maybe five to ten percent in emerging markets, I bet in 10 years that number is closer to thirty per cent.”

Mostly solid financial systems and fast-growing domestic consumer markets helped many larger developing economies such as China, India, Brazil and Indonesia post impressive growth rates even in the midst of the global recession. That means these economies will make up a larger portion of the global pie and economists expect today’s emerging markets to account for half of global gross domestic product in a decade or so, from about a third currently.

That is pushing institutional investors to increase their positioning in developing-markets stocks, the performance of which has been nothing but encouraging in an otherwise tough year for the global economy. The MSCI Emerging Markets index has soared 68% this year, comparing nicely with the 24% advance for the Standard & Poor’s 500-share index. Some of the hottest [2009] national markets have been in Russia and Argentina, where benchmarks have more than doubled. India’s Sensex index is up 79%, and the Shanghai Composite is up 69%. Brazil’s Bovespa is up 80%.

Technorati Tags: south-south, emerging market trends

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Agrimoney.com

Crop markets are at the start of a “long-term bull run”, Bank of America Merrill Lynch has said, joining investment bank peers such as Barclays Capital, Goldman Sachs and UBS in unveiling upbeat forecasts.

The worst recession for decades had not diminished the likelihood of economic expansion, coupled with a switch to more expensive diets in developing countries, providing “strong support” to demand for grains, meats and oilseeds.

The trend will put “upward pressure on prices in the medium term”, Merrill Lynch analyst Francisco Blanch said in a note revealing Merrill Lynch forecasts for 2010. And “of more concern” was that the crisis had not prompted a rebuilding in of food commodity inventories, most of which remained at “multi-decade” lows.

Technorati Tags: agriculture, economic trends, 2010 forecast

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A better policy approach in Brazil compared to India is direct cash transfers, to the poor to purchase food rather than have subsidized food available at government-shops with its accompanying problems of shortages, adulteration, sale in a secondary market. Government role in food security should ideally be restricted to funding to the poor, not provisioning and implementation for which the market mechanism can be deployed. Competition is essential to drive down costs and improve quality. Due to political compulsions, this is not always the case.

The Success of Brazils Zero-hunger Program

Financial Express

Brazil has large farmers and also small farms. It has tried to manage its dual system of agriculture through two separate ministries – Ministry for Commercial Agriculture and Ministry for Family Farms. These two ministries have well defined policies.

In Brazil small family farms largely cater to the needs of domestic food security, while the commercial farms produces mostly for exports. According to the special advisor to the Brazilian President, Maya Takagi, the productivity of small family farms is increased through government support. Despite occupying 24% of the area, family farming is responsible for 38% of production and generate 74% employment. To meet the needs of food security, Brazil has a programme to supply foodgrains to cheap restaurants, community kitchens and food banks. In 2008 147,000 small family farms in Brazil benefitted by an investment of $ 284 million and in 2009 the funding has increased to $ 326 million. The incentives for small family farms in 2009-10 is slated to increase to $ 8 billion

Since 2003, Brazil has launched its food security programme called ‘Zero Hunger Programme”. The budget for this programme in 2009 is $ 10.8 billion. The Brazilian government purchases food from small farmers and cooperatives against remunerative prices for meeting the needs of the Zero Hunger Programme.

In India the government hesitate to increase the issue prices of foodgrains distributed through public distribution system (PDS) as this may cause hardship to the poor. But Brazil has sought to resolve this issue by increasing the income of the poor through what is called the Cash Transfer Programme.

Brazil does not have the problem of food production. It has the problem food distribution and increasing the poor people’s access to food. In 2001 about 21% of the households amounting to 10 million or 27% of the population amounting to 46 million people were poor earning less than $ 1 per day. About 47% of the Brazil’s poor live in the north-east region, 30% of them live in the south-eastern region, 10% of them live in the southern region , 7% of them live in the northern region and 6% of them live in the central-western region. Hunger was increasing in metropolitan areas. The situation has improved with the launch of Zero Hunger Programme and Cash Transfer Programme.

Technorati Tags: india, brazil, food security, public policy, zero hunger

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Business Standard

Oil and Natural Gas Corporation (ONGC) has replaced Reliance Industries Ltd (RIL) with Repsol YPF SA, Spain’s biggest oil company, and Malaysia’s Petronas to bid for Venezuelan oil blocks next month.

ONGC Videsh Ltd (OVL), the overseas investment arm of state-run explorer, is likely to bid for the massive Carabobo project in Venezuela’s Orinoco heavy oil belt with Repsol, Petronas, Indian Oil Corporation (IOC) and Oil India Ltd, sources in know said.

The Latin American nation is offering a maximum of 40 per cent stake in the development of oilfields in the Orinoco Belt and the rest would be held by Venezuela’ state oil company, Petroleos de Venezuela SA, or PdVSA.

Sources said Repsol and Petronas will hold 25 per cent interest, while OVL would hold 10.1 per cent. IOC and OIL would have 2.45 per cent apiece.

Technorati Tags: india, venezuela, oil, energy

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If there are stringent local emission mandates, this could encourage manufacture of sub-compact hybrids. Hyundai and Suzuki have already made India their global hub for small cars.
The Associated Press

Less noticed is the fact that India will top Japan for the first time in sales of super-compact cars. It overtook Japan as the world’s number one producer of basic cars in 2007.

Automakers like Ford, Nissan, Volkswagen, General Motors, and China’s Shanghai Automotive Industries Corp. are pouring hundreds of millions of dollars into the country, hoping to capture a piece of the growing market for tiny, inexpensive passenger vehicles. As they do so, they are quietly transforming India into an export hub for small car manufacturing. More than 892,000 basic cars — the smallest category of passenger vehicle — will be sold in India this year, up 14 percent from last year and surpassing the 708,034 forecast for Japan, according to J.D. Power and Associates.

Unlike China, Russia and Brazil, where consumers buy a range of cars, from basic to luxury, Indians overwhelmingly prefer small, affordable cars.

Drive down the streets of a typical Indian megacity, where the bulk of car buyers live, and it’s easy to see why. Millimeters count. Drivers squeeze through any remotely plausible opening on the clogged streets, grazing handcarts, bicycles, cars, pedestrians and livestock in the process. And price matters. Executives say most Indians won’t spend more than $8,000 on a car.

Technorati Tags: india, automotive, small car, export hub, consumer culture

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Checkbiotech

The Global Research Alliance on Agricultural Greenhouse Gases was launched this week (16 December) at the UN climate talks in Copenhagen by 21 countries, led by Tim Grosser, New Zealand’s associate minister for climate change issues.

Agriculture accounts for 14 per cent of the world’s total greenhouse gas emissions, on a par with the transport sector. Crop experts expect the world food demand to double by 2050 compared with 2005 and greenhouse gas emissions from agriculture to rise by 30–40 per cent in that period.

Initial pledges totalling around US$150 million have been made by alliance members Canada, New Zealand and the United States.

Chile, Colombia, Ghana, India, Malaysia, Uruguay and Vietnam are also part of the alliance, which hopes to attract more members.

The alliance is seeking international cooperation and investment to study agriculture’s role in climate change, including the amount of greenhouse gases emitted in fields.

Other aims include helping scientists gain expertise in, and technology for, mitigation and adaptation; facilitating information exchange among scientists globally; and improving access to and sharing of knowledge by farmers.

Technorati Tags: agriculture, south-south

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 PR Newswire

Evalueserve, a [Indian] provider of Knowledge Process Outsourcing (KPO) services, recently decided to expand its existing operations in Chile, one of the company’s more profitable locations, to take advantage of the country’s business environment and meet current and anticipated customer demand as part of its global strategy.

Ten years ago, Indian companies investing in Latin America were few and far between. Within the past few years, however, Indian service providers began viewing Chile as a complementary location to their main operations. To strengthen its global offering, Evalueserve opened its Latin American operation in Chile in 2006. From Chile, the company is able to diversify geographical risk, offer U.S. daytime support, a 24×5 global delivery platform, Latin American services (Spanish and Portuguese) and overnight Asia coverage. This strategy allows Evalueserve to provide a high level of service to U.S. clients at considerably lower cost.

Evalueserve has already begun its five-year Chilean expansion. The operation currently employs 150 people and is expected to more than triple in size, expanding by fifty percent annually until it reaches approximately 500 employees by 2014.

Technorati Tags: chile, india, KPO

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