Friday, October 28, 2016

FT Lat Am For Friday October 28, 2016

7:56 AM (1 hour ago)
to me
A tale of two continents
By Joe Leahy 
October 27, 2016
Populism may be largely on the run in the Southern Cone of Latin America dominated by Argentina and Brazil. But in Venezuela, socialist president Nicolás Maduro can appear to be hanging on with his fingernails to power.  After curbing an attempt to hold a referendum on his unpopular rule, the successor to Hugo Chávez this week faced mass protests from opposition leaders who claim he is running a dictatorship.
In initially largely peaceful protests, the opposition called for a general strike and threatened to march on the presidential palace next week. But the 53-year-old Maduro is not flummoxed. He knows he cannot easily be legally removed as the constitution does not allow for impeachment.
Of course, a revolution is possible, since he is so unpopular, with 90 per cent of Venezuelans believing the country is going in the wrong direction amid triple-digit inflation and food shortages. But he has the Supreme Court on his side and the army. He also kept foreign investors off his back this week when lenders to Venezuela’s national oil company PDVSA, narrowly agreed to a debt swap.
Elsewhere on the continent, Mauricio Macri, Argentina’s new president, is reaping the rewards of pro-business policy-making by embarking on a debt extravaganza. Less than a year ago, Argentina was facing a balance of payments crisis after 12 years of populism. This year, the country has stormed back onto capital markets with public entities issuing $40bn of debt, half of it in foreign currency. Investors are betting that the economy will return to growth of 3-4 per cent next year after an expected contraction of 2 per cent in 2016. 
Across the border in Brazil, populism is largely on the retreat following the August impeachment of leftist former president Dilma Rousseff. But while she has been replaced with a pro-business federal government, in Rio de Janeiro an evangelical gospel singer looks likely to win municipal elections this Sunday. The candidate, Marcelo Crivella, wrote in the 1990s of how other Christian denominations have demonic rituals and Hindus drink the blood of their children. He has since disowned these views, but his rise is a sign of the growing weight of alternative sources of power in Brazilian politics, such as the evangelical churches.
Quote of the Week
“They needed whatever cash the market was willing to offer. PDVSA made a lot of noise and threats but at the end of the day they have no leverage. This was credit at market terms” - Siobhan Morden of Nomura 
Chart of the Week
EMSquared Chile: loosening up (Premium)
Tequila special
Read our Business of Tequila special report
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The week in review
Venezuela’s mass street protest calls for general strike
Thousands mobilise after suspension of referendum seeking to oust President Maduro
Argentina’s debt bonanza buys time, raises risks
Aggressive borrowing by government meant to secure financial cushion for reforms
The Business of Tequila
Connoisseurs drive growth at the expense of the headache-inducing low end
Embraer to pay $205m after US-Brazil bribery probe
Plane maker settles claims it paid millions of dollars to secure government contracts
New tequila and mezcal regulations upset local producers
Rules threaten local history and culture, say small distilleries
Chinese liquor lovers are not taking to tequila
Baijiu is still the preferred spirit in China
Tequila-makers carefully plan agave harvest to keep prices down
Brands are more self-reliant about the supply of raw material
Venezuela’s PDVSA wins short-term relief with bond swap
PDVSA bags bond swap but doubts remain
Chile: loosening up
Interest rates are headed lower, setting the stage for economic revival
Brazil’s evangelicals push politics to the right
Former missionary set to become next mayor of Rio
Venezuela suspends anti-Maduro referendum
Opposition cries foul as officials suspend vote to remove leader
Brazil faces budget disaster, says speaker
Michel Temer’s government is trying to cap spending as deficit reaches 10% of GDP