Weekly Roundup | 12.05.2023
Top headlines and news impacting Latin America, Africa and Southeast Asia commercial real estate.
📰 Lula Smartly Backpaddles Claims Brazil is Joining OPEC
OPEC is an increasingly irrelevant organization given the inability of it to control its members lately, and that countries it seeks to contain, such as America, are now oil-independent. The future of oil trading is between nearby “friends” and at prices mutually agreed. This flip-flop is no surprise to observers who are aware that Lula’s diplomacy is “la-de-da” in nature and mostly hot air and bluster.
📰 Mexico is Wasting its Nearshoring Opportunity
On paper, Mexico is positioned ideally to reap the benefits from America’s decoupling with China. In 2022, Brazil received 41% of FDI inflows in Latin America, Mexico only 17%. Mexico’s industrial parks are filling up but that’s more to do with lack of suitable land than significant increases in actual nearshoring demand from American companies. Most of the new demand is from Chinese companies looking to game the USMCA framework so couldn’t technically be considered nearshoring. We propose instead to call it “scam”shoring, “fraud”shoring, or “tax”shoring.
📰 Saudi PIF to Invest $1.2 Billion in Brazil Toll Road Project
The 30-year concession will improve a 473 kilometer (i.e., 293 mile) section of road infrastructure connecting Brazil’s fields and ports. The local partner is Patria, a private equity fund based in Brazil, which itself operates over 4,000 kilometers (i.e., 2,485 miles) of toll roads in Brazil. PIF is the 7th largest sovereign wealth fund in the world. Read about Brazil’s soy excellence and vulnerabilities on one of our LinkedIn discussions.
📰 Construction of New $20 Million Industrial Park Begins in Coahuila, Mexico
The park is located just outside Nuevo Leon, along the Texas border. The park will have 38 industrial lots and 2 commercial macrolots and classified as a last-mile industrial complex.
📰 Nestle Plans to Invest $1.2 Billion in Brazil by 2025
The Swiss company aims to expand in its third-largest market and grow manufacturing capacities. The investment will be used to build a new Purina plant in southern Brazil and launch a new KitKat production line at the Cacapava plant. Nestle recently announced a deal to buy a majority stake in Brazilian premium chocolate maker Grupo CRM.
📰 East Africa Troops Leave Cobalt-Rich DRC
The forces will be replaced by Southern African Development Community (Sadc) troops, but will they do much better? Emerging Real Estate Digest predicts DRC’s cobalt will be secured eventually by European armies given that the EV revolution being fomented can only occur if Congo’s cobalt is able to be extracted reliably. Our community discussed this on LinkedIn and here’s a video of miners, many are children, extracting cobalt to be used in your iPhones and EVs.
📰 Equinor Ends Presence in Nigeria Through Divestiture
The Norwegian energy company announced its sale of Equinor Nigeria Energy Company which holds a 20.21% stake in Agbami, Nigeria’s largest oil field. The projects is run by Chevron, and since 2008 has generated around 1 billion barrels of oil. Equinor entered Nigeria in 1992. ExxonMobil, Shell and TotalEnergies also have expressed desires to divest from Nigeria.
📰 Oppenheimer Partners Now Controls Nigeria’s Largest Beverage Can Maker
The Oppenheimer family has its roots in South Africa and staggering wealth generated through diamonds (De Beers), mining (Anglo American) and other business ventures. The shares were purchased from Affirma Capita, formerly Standard Chartered Private Equity. Oppenheimer first bought into the company in 2018, and Affirma in 2012. GZI, the can maker, produces 3 billion aluminum cans a year in Africa.
📰 Pepkor Expanding its Footprint in Brazil
Pepkor is Africa’s largest clothing retailer, based in Cape Town, and has 5,917 stores in 11 countries. It now plans to open 50 new stores a year in Brazil, double its most recent projections. It recently purchased an 87% stake in Brazilian merchant Grupo Avenida. Here is an audio recording of Pepkor CEO, Leon Lourens, discussing the acquisition and why he chose Brazil.
📰 Africa’s Supermarket Revolution
On average, Africans buy 70% of their food, drink and cosmetics from informal vendors (see chart) with supermarkets serving the affluent. Local chains are changing this and providing retail offerings between informal and the high-end, the later supplied by chains such as Shoprite and Carrefour.
📰 Bangkok Megamall Opens with an IKEA
The Mall Group is the developer and the mall’s name the EmSphere. It is a six-story structure with 200,000 m² (i.e., 2.15 million ft²) of GLA with more than 300 tenants, including an IKEA.
📰 Singapore Property Sector Hits a Rough Patch
Scandal after scandal from the city’s financial sector is turning Singapore into a place capital avoids, rather than flocks to. The fall from grace of the Southeast Asian financial hub is evidenced by falling property prices in sections of the city where the mega rich like to play. Singapore made its name by being a low-tax place to channel capital with regulators willing to look the other way if the right firms and local partners utilized. Look for Tokyo and Manila to pick up the slack for conduits of Western capital into the region.
📰 Vietnam Agrees to 15% Minimum Tax for Foreign Firms
Perhaps this is why Intel scrapped plans to build a large semiconductor plant in the country? Large firms who bought into Vietnam based on low taxes will be negatively impacted including Apple and Samsung. Vietnam was under pressure to adopt the tax as it’s seen as a race to the bottom giving poor countries an unfair advantage in luring companies to relocate and establish operations. The move will stabilize Vietnam and be good for it in the long run.
📰 Philippines Builds New Coast Guard Station in South China Sea
The station is on the contested island of Thitu in the South China Sea, and boosts its ability to monitor Chinese vessels and aircraft in the region. The facility is state of the art and has radar, satellite communications and sophisticated cameras. The Philippines has experienced two earthquakes, one small tsunami, and mass shooting at a church all in recent weeks.
