HOW TO KNOW WHEN AND WHERE TO GO FOR FOREIGN BONDS AS A CURRENCY PLAY Too…..
As I was requested by one of you …to take on one country as an example to show how to go about using foreign bond as a currency play….am going to use Brazil as it’s the one am working on for my next move
Why China’s New Pet Economy Looks to Grow in Coming Months and why you should go for their bonds….
In case you have kids, you can’t really appreciate what it’s like caring for a kid through sick days, cheering for them at football games, and happily sending them off to college with a good chunk of what could have been your retirement plan.
But that’s not all what being a parent is. It’s investing in your child’s long-term future so they can walk out of college with a job and an adult life…no matter what sacrifices you have to make in the short term.
And hopefully, given the right amount of love and financial assistance, the investment you make in your kids now in your 30s,or 40s, will pay off when you need your kid’s support in your 70s or 80s.Again, it’s a long-term investment…but a rewarding one.
And right now, that’s exactly what China is doing with its new pet economy, Brazil. Indeed, I’ve started to think of Brazil as China’s son because every positive piece of Brazilian news can be traced back to China.
We’ve talked about China here at corporate fx nakuru before, so you already know that the Chinese strategically plan every single move they make. They also tend to make long, calculated moves that are designed to pay off 10 or 20 years in the future.
Right now, their plans revolve around Brazil and the strategic resources located in South America’s largest and most exciting economy…
Listen the following……
China to use 2trillion$ currency reserve to buy commodities…sources CNBC NEWS
We all know that China has deep pockets and US$2 Trillion in reserves to spend. But just in the past month, key Chinese officials are starting to reveal how they will spend those funds.
China is already making investments in resources around the world. Why energy reserves? China knows full well that whoever has the oil reserves will run the world over the next 25 years. So they’re making friends and strategic relationships with the few resource-rich nations making oil discoveries.
Brazil just happens to be one of the few countries on earth with any real oil discoveries so far in this century. Remember that really huge oil discovery in 2007? It was in Brazil. It boosted Brazil’s potential oil output by 62%. It also happens to be the world’s largest oil reserve since the Discovery of Kashagan in Kazakhstan in 2000.
But here’s where it gets really interesting: China has been busy subsidizing Brazil’s oil efforts.
Over the last year, Chinese firms have started making huge investments in Brazilian resources and infrastructure for the first time ever.
In fact, they just promised to lend Petrobras, the largest state-run oil company, US$10 billion to help search for oil. In return, Brazil has promised to pay them a 10-year supply of oil (150,000 barrels a day the first year, 200,000 barrels a day the remaining nine). Talk about a Return on your investment.
It’s not just Petrobras either. There are at least 15 other Brazilian companies that show promise, based on China’s influence and demand for various commodities.
This is all huge, folks. And it’s a BIG reason I have my eyes trained on Brazil this year. But in truth, this is only the beginning…
More Money from Father China please…..
Brazil and china signs multi billions trade agreement….sources FINANCIAL TIMES
China just overtook the U.S. as Brazil’s biggest trading partner. There’s a good reason for that. China can’t get enough of Brazil’s raw commodities. According to a recent report by Goldman Sachs, China eats up 23% of the world’s soybeans and 9% of the world’s sugar. They also use a whopping 41% of the world’s cotton. And guess what? Brazil just happens to be a major exporter of all three.
This is another classic example of how Brazil’s success can be traced back to China. Not to mention, China now buys the lion’s share of Brazil’s commodities anyway. In fact, Brazil’s exports to China just jumped 65% year over year. The Chinese government’s massive stimulus package could lead to more rapid increase in Chinese demand for Brazil’s commodities.
If food-based commodities weren’t enough, China also is after Brazil’s iron ore. Iron ore is Considered one of Brazil’s top exports (right after soybeans), and right now the Chinese continue to demand more to create more steel.
Why do they need steel? Besides the fact that China is the biggest alloy producer in the world, China also has massive infrastructure projects under way. In fact, Morgan Stanley just released a note to their clients predicting iron ore will increase prices by 27% in Brazil.
Brazil unemployment slumps more than forecast …SOURCES WALL STREET JOURNAL
Not surprisingly, all this China influence is boosting Brazil’s economy. On a seasonally adjusted basis, Brazil’s unemployment rate fell to 7.9% from 8.4% in May. That’s the lowest level since November 2008. The reason for all these jobs? You guessed it…more demand from China.
Brazil May Recover Faster than developed Nations….BLOOMBERG
All that said, let’s keep in mind that it’s not all seashells and balloons for Brazil. Even with
China’s influence, Brazil still has its own recession to deal with.
Given all this great news flowing out of Brazil, the IMF has recently issued a “pro-Brazil” communiqué. The IMF says they believe Brazil might lead Latin America to a recovery before
the world’s more developed countries.
It bodes well for Brazil to be the “leader of the pack” of countries coming out of recession.
Brazil is showing growing signs of a rebound since China started pumping funds into Brazil this past winter. They’re showing resilient consumers, a healthy banking sector and higher
global commodity prices.
Additional signs of recovery have been springing up in recent weeks. It doesn’t come as a surprise to me that Brazil is rebounding, but it is shocking some of the world’s economists
who expected Brazil’s slump to be longer and deeper.
Brazil’s economy saw a decline of 0.8% in the 1st quarter of 2010. That officially put
Brazil in a recession. I think this small decline surprised not only economists, but the Brazilian
Central Bank.
Do you think China might be stupid to do all that commitment….or they do not know what they are doing……..?They have one of the finest brains in the world….and that’s how we piggy ride on their brain…….as this truly shows how Brazilian economy is bound to grow …and as it grows..so does it currency appreciate…..
Now with that one in mind tell me what else you need..to get convinced to go for BRAZILLIAN BONDS.
Currently Brazils interest rate is trending at closely to 12% …, two times greater than our interest rate here in Kenya which has been reviewed down ward up to somewhere around 6%.
So if you purchase Brazilian bonds today …you will be given a certificate which indicate your amount invested …, expected yield return plus over what period…..its very easy by the way.
After that …as your bond will be featured in Brazilian Real….two things will happen here.
1) Your capital must first of all be converted from Kenyan shilling into the dollar first as the Brazilian Real is not popular her in Kenya…..
2) Then from US dollar to Brazilian real and consequently you purchase the Brazilian bond.
During the maturing period…out of such well laid down fundamentals is automatic that the Brazilian Real will outperform the US dollar …and the dollar itself will out shine the Kenyan shilling ……
So with that one in mind …you will have 3 main returns all coupled under one investment….ie…bond return (12%)….,Brazilian Real appreciation against the dollar and the dollar appreciating against our own currency here….heeee…imagine all that.
And that’s how we carry out our home work right here at corporate fx before choosing a particular bond of any country.
So this is how you can take on bond portfolio as a currency play too…easy yet simple…
Forex trading is not only candlesticks…no…no……
Next I will tell why Kenyan shilling is losing as such against the US dollar
Your future depends on your dreams so go to sleep !