Author: Antonio Guerrero



By Antonio Guerrero


E.ON, the German power utility, is partnering with MPX Energia, a power company controlled by Brazilian billionaire Eike Batista, to launch a joint venture to build Brazil's largest network of privately held power plants.


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Two state-run banks are helping Brazil build low-income housing

The project will require some $34 billion in investments to build plants in Brazil and Chile, as MPX holds power generation licenses in both countries. The new plants are expected to produce 20 gigawatts of electricity.


Assets under management by Brazilian investment funds reached a milestone in 2011, topping the $1 trillion mark for the first time. According to data from the Brazilian Financial and Capital Markets Association (Anbima), total assets under management reached $1.07 trillion following three consecutive years of net deposit increases that reversed a 2008 decline. An estimated 55% of assets were held in fixed-income accounts, with less than 10% held in equities. Anbima reports there were 10.8 million accounts managed by 11,500 investment funds.


The Dilma Rousseff administration is making housing construction for low-income families one of this year's priorities, as part of a bid to boost economic growth. Caixa Econômica Federal and Banco do Brasil, two state-run banks, are increasing their mortgage lending programs to support the strategy. Caixa Econômica Federal will provide $51.5 billion in mortgage loans this year, while Banco do Brasil will make another $4 billion to $5 billion available. Finance minister Guido Mantega predicts the economy will grow by 4% in 2012, after a weaker 3% expansion last year. The economy grew by a hefty 7.5% in 2010.


Heavy rains and flooding in southeastern Brazil, coupled by a severe drought in the south, are expected to fuel inflation. Crop damage throughout the southern region will boost fuel prices, adversely impacting the government's anti-inflation efforts. Inflation reached the top of the official inflation target band in 2011, at 6.5%, following a 5.9% rate in 2010. This year's target is 4.5%. The situation may prompt the central bank to end its six-month streak of cuts in the benchmark Selic interest rate, which now stands at 11%. The central bank had predicted in January that the Selic rate could end 2012 below 10%.