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Travel to any country in Latin America and you will see the visible hand of China at work: a computer manufacturing plant in Mexico, a copper mine in Peru, a football stadium in Costa Rica. In the year 2007, the thought of China in Latin America would have appeared, at best, improbable. But in a three-year stretch, China signed free trade agreements with Chile, Peru and Costa Rica, inked billions of dollars worth of deals in oil and mining projects throughout the region, and supplanted the US as Brazil’s biggest trading partner. Once almost unseen in Latin America, China’s bilateral trade has risen from $12bn in 2000 to well over $150bn today.

Given the importance of its new Asian friend, Latin Americans are rolling out the red carpets to Chinese business delegations and jumping on planes not only to Beijing but also to Shanghai, Shenzhen, and Tianjin.

Rationale Behind Chinese Investments in Latin America [...]

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In line with China’s outbound investment strategies in Africa and Asia, China is now planning to create a $5 billion usd investment fund for Latin American investments.

The funds target investments will include, infrastructure (probably to help the Chinese get commodities out), agriculture, mining and energy.

Read more in Spanish from Argentinean DERF Agencia de Noticias.

In addition to Colombia, the article also shares data complied by Economatica on the growth of the other major stock exchanges in the region, which is what CSA will be sharing with you today.  To read the full article from the Latin Business Chronicle click here.

Colombia – Best performer in Latam last year, IGBC (Colombia’s benchmark) stock index has grown in value by 927.9% during the past 10 years, and average decline in value of transactions in 2008 was 2.3%—lower than all other countries in the region

Brazil – Latin America’s largest stock market, Ibovespa (Brazil’s benchmark) stock index has grown 301.3% during the past 10 years, and the average decline of transitions in 2008 compared with 2009 was 13.6%.

Mexico – IPC (major benchmark index in Mexico) has grown 250.5% during the past 10 years, and the average decline in transactions last year was 13.9%

Venezuela – The Caracas stock index has grown by 916.5% during the past 10 years, and the average decline in transactions was 29.5% last year—the second worst in Latin America.

Argentina – The Merval inces has grown by 321.3% during the past ten years, and had the worst average decline in transactions last year, suffering a decline of 54.4%.

Peru – The Lima stock index (IGBVL) has been one of the regions best performing in the past few years.  Seeing growth of 671.1% during the past 10 years, and a decline in average transactions last year of 21%.

Chile – Last but not least, Chile’s IPSA index has grown by 218.8% over the past 10 years, and the average decline in transactions last year was a mere 3.6%-second best next to Colombia.

Rixin Development will acquire a 70% stake in the Chilean property.  Such a deal shows the power of China’s up and coming company’s.  For starters,  Rixin Development is listed only on a local provincial enterprise information website,  sdwin.com.  The company does not have its own home page.  Officially it is a “trader for home appliances, textiles, auto parts and so on, and importer and exporter of various products and technologies.” However, I wish any readers the best of luck if they undertake the challenge to find any further information from a official company medium.

If you follow Alibaba.com’s 101 on how to avoid being scammed in China, such a deal should probably send alarm bells off.   Perhaps in the post, economic-recession world of 2010, the traditional elements which define a professional entity are no longer necessary.  Especially when your a developing Latin American country hungry for investment… or a private investor in China, STARVING for investment opportunities in a very over-saturated market with little options on where to park your capital and have it grow at the same time.  It is clear, the deal is going through and that the company is legitimate.

Li Zihao, president of Rixin was recently quotes saying, “privately-owned companies are in a better position to invest in overseas natural resources.” Time will tell if this is actually true, or if the central government is content with allowing such a dynamic to emerge.

Read a more comprehensive article on the facts (which are known) surrounding this deal via this article over at ChinaMining.org.

Now lets compare the two ETF’s.

Mexico – EPU.mx (Bolsa)

EPU.mx - Mexican Stock Exchange

United States – EPU (NYSE)

EPU - New York Stock Exchange

libcom.org

“The position of the workers is to go on strike on Monday starting at 9 a.m. (1400 GMT) and leave the mines,” Luis Castillo, the federation’s director, told Reuters.

Reuters reports some unions have agreed to stay on the job, but considering that Peru is the largest producer of silver in the world, #2 of zinc, #3 of copper, #4 of lead, and #6 in gold—such a walk out does have the potential ripple over into global spot prices for the above mentioned metals.

When miners held a similar strike in mid-2008 and the strike helped push copper prices toward a record high—although this was at the peak of bull markets, the market effect is no less noted. The underlying point; markets are watching and investors pay attention to these kinds of things.

Company’s which will be affected include, Volcan (VOL_pb.LM), Newmont (NEM), Freeport-McMoRan’s (FXN), Xstrata’s (XTA.L), Buenaventura (BVN), Southern Copper (PCU) and BHP Billiton (BHP).

Click here to access a more details story on this topic from Reuters.

As always, CSA will keep you up to date with relevant developments as they unfold.

~ Benito

The 1200 striking workers have begin working again according to manager Julio Ortiz, who said they returned to work because the company said it would commit to some of the workers demands.

Currently workers earn a salary of 1,770 ($614) Peruvian soles a month and the company has released a statement saying Shougang is willing to raise the daily salary by 5.50, or 165 soles a month—bringing the new total to 1935 soles ($677).

According to this Reuters article (in Spanish), Shougang earned a solid 417 million soles last year ($144.7 million dollars), a increase over the year before of 50%.

All in all, it seems Shougang won this battle… CSA will continue to bring you updates on this matter in the weeks to come.

The project is valued at $2 billion usd and will become Ecuadors largest hydroelectric facility.  Once completed, the hydroelectric facility will be capable of meeting 75% of the country’s total power supply, reports Xinhua.

According to this Xinhua article, the Export-Import Bank of China will cover 85 percent of the project’s total cost, with the remaining 15 percent covered by the Ecuadorian government.

President Correa said that “the launching of this project would be a historical event as it represents one of the biggest foreign investments in Ecuador and will create about 4,000 direct jobs and 15,000 indirect jobs in Ecuador.”

You can click the highlighted article title above to access the article directly and read all the juicy details about how Uruguay seems to be the place to be.

Interestingly enough it is not because the country is swimming in resource wealth, a cheap labor sector or any of the cliché niches of a “developing country.” Rather because of its excellent record of political stability, the existence of a judicial system which is fair and honors the law and in my opinion… also because of its unique position next door to Brazil—Uruguay’s major economic partner at the moment.

Major investments highlighted in the article include:

Argentina: No particular companies mentioned, but the article describes how Argentina’s investment community has become “disenchanted with the unorthodox policies and uncertainties of their country they have crossed to Uruguay looking for investment opportunities.”

Brazil: In Sept 2009 Brazilian food processing giant, Marfrig acquired a 51% in the Uruguayan Tannery Zenda. Zenda produces upholstery for some of the most prestigious German car brands

Spain (Basque Province): Cultural heritage links many Uruguayans to “la madre patria” aka, the mother country of Spain, and specifically to the Basque region. Finance minister Alvaro García met with Basque entrepreneurs who expressed “a firm interest to invest in different sectors.”

China: In Sept 2009, a delegation of Uruguayan entrepreneurs attended China’s International Investment and Trade Fair and returned with news Chinese investors were interested in investing in Uruguay’s infrastructure sector; including its ports, energy sector and water treatment facilities.