So a few posts ago we wrote about the decline in the mortgage market. Below is a graph of the last 2 years of construction costs per square meter in regions across the country. There are some interesting trends worth talking about.
Just for fun, we decided to compare some bottom-up betas for different sectors of Brazil with sectors in the US. For those who don’t know, beta is a measure of how the market price of a company moves with the general market (the S&P 500 in the US, and the Bovespa in Brazil). A beta of 1 means a stock’s price moves exactly in line with the market, while less than 1 means it’s less reactive to market movements, and more than 1 more reactive. An “unleveraged” beta means that the risk of debt has been calculated out of the beta value (debt generally adds to reactivity to market movements, so taking out debt risk will generally lower a beta).
Blue represents US, while green represents Brazil
Here are a few observations:
Every game has winners and losers, even economic growth. With lots of talk about productivity loss in Brazilian industry, we decided to take a look at Brazil’s biggest growth years since the crisis and see what the big losers and winners were in Brazil’s supposed deindustrialization.
If you’ve been following exchange rates, you know that the real lost value against the dollar lately, going up about R$0.12 on the dollar in just a few weeks (from February 27th to March 15th). This is about 25% more than the average month on month change in the real/dollar (R$0.07) over the last 10 years, and happening only in a few weeks. This shouldn’t really raise any eyebrows; currency fluctuations are often volatile, but the reasons this time might be different.
It’s hard to appreciate something until it’s taken away from you, or so it’s said. Many of us living in Curitiba are feeling that today (and yesterday…but hopefully not tomorrow) with the recent public transportation strike. It’s been disruptive to our lives, yes, but is it warranted, and how can the problem be solved?
Everyone seems to be talking about property this week, and Inva is no different. Continuing on a previous post, our CEO Raphael Cordeiro showed here how sales of real estate fell in São Paulo throughout 2011 (Graph on the left). Continue lendo
So we think there is a possibility that the Brazilian property bubble is finally popping. Although offer prices are not yet reflecting a downgrade of prices, there is information that developers are cutting down payment prices by as much as 50% and making further deals to liquidate their positions. Like all bubbles, judging the timing may be difficult, but as far as what this means for the average investor or consumer, I’m optimistic.