"Investors are watching election polls very closely, and people are betting that Dilma’s support is losing momentum," says one fund manager as the Bovespa jumps 3.5%. The latest polls suggest opposition candidate Marina Silva has a 70% chance of winning, says Nomura's Tony Volpon.
Shares of Anheuser-Busch InBev (BUD -0.8%) are lower after some of the buzz over a potential merger with SABMiller (OTCPK:SBMRY) wears off. In Europe, shares of SBMRY are also tilting lower.
Analysis of the combination of the two beer giants is nearly evenly split. Some analysts think the regulatory hurdles are too high to clear, while others maintain that outside of the U.S. and China there's not a huge amount of overlap that would draw in regulators.
Stifel Nicolaus and Buckingham Research have both raised their price target on BUD, moving to $130 and $137 respectively.
MillerCoors (TAP -1%) is in a holding pattern. If the mega-merger goes through, the company is nearly assured of a new owner.
The wildcard: There's also still the chance that A-B could have the rug pulled out from under it if SABMiller improves its offer to Heineken (OTCQX:HEINY) to a level which wins over the controlling family.
Macau casino operators will see revenue drop 5% Y/Y for the June-to-August period, according to an estimate by Macau Business Daily.
A more aggressive stance by Beijing against corruption and lavish spending is viewed as changing the mindset of gamblers in Macau.
Morgan Stanley issued a report on Macau last night in which it noted a fact-finding mission to Macau left it with the impression that a floor hasn't been found yet for the revenue slide. A labor shortage in the territory could also have an impact, note analysts.
Shares of Macau-related stocks are lower in premarket trading: Melco Crown (NASDAQ:MPEL) -2.7%, Las Vegas Sands (NYSE:LVS) -3.0%, Wynn Resorts (NASDAQ:WYNN) -2.2%, MGM Resorts (NYSE:MGM) -2.9%, Galaxy Entertainment (OTCPK:GXYEF) -1.9%.
A four-year low in foreign direct investment - which fell 14% Y/Y in August to $7.2B - makes for a convenient excuse for Shanghai's 1.8% decline overnight. Hong Kong fell 0.9%. Combined with the slow economic data is a continuing rush of IPOs which investors fear will suck up funds - eleven more were approved yesterday.
FDI's 14% drop in August follows June's 17% decline - it's the first back-to-back double-digit losses for the gauge since 2009.
Although a sale price as high as ~C$300M ($270M) had been rumored earlier, Reuters reports that VimpelCom (NASDAQ:VIP) and Egypt's Global Telecom will sell their stake in wireless carrier Wind Canada to Globalive Capital for C$135M ($122M).
The proceeds of the sale will go to Vimpelcom, in repayment of part of the debt owed to the company.
India investors waiting for a confirmed upturn in the economy following Narendra Modi coming to power in May, will have to wait a bit longer as the most recent data is decidedly mixed.
While inflation has slowed to 7.8% vs. the central bank's target of 8% by the start of next year (target is 6% for 2016), industrial production grew just 0.5% Y/Y in July, down sharply from June's 3.4% and May's 5%.
The most recent data show exports in August of $26.96B, up 2.35% Y/Y, and imports of $37.8B up 2%.
The Sensex dipped 0.9% last night, but remains one of the globe's biggest gainers this year. EPI +30.6%, PIN +26% YTD.
Marina Silva has a better than 50% chance of defeating incumbent Dilma Rousseff in the presidential election, says Brown Brothers Harriman after last week's boost in the polls for Rousseff sent the Bovespa lower by 6%.
Fluctuations in the polls at the moment aren't a big deal because the first round of elections won't produce a winner. Instead, the election will be decided in the 2nd round (October 26). "We prefer to fade the first round volatility and position for the second round dynamics."
Bouncing a little from last week, the Bovespa is higher by 0.6% this morning. EWZ +0.25%.
Many China-related ETFs rely on a quota system - the renminbi qualified foreign institutional investor (RQFII) scheme - through which China allows access to its stocks traded on the mainland. High inflows into RQFII funds - AUM have nearly doubled this year to $12.6B - are rapidly exhausting the quotas, and Deutsche Bank is rationing U.S. access to those China ETFs - ASHR and ASHS - using the RQFII, and has temporarily closed similar funds to new money from European clients.
Synthetic ETFs which track Chinese stocks using derivatives have not been affected.
Hong Kong-based CSOP Asset Management says more than 96% of its quota has been used up and it's no longer taking money for its flagship China equities fund, the largest RQFII ETF.
A deal between the beer giants would require significant divestiture massaging, possibly including SABMiller shedding its interest in MillerCoors (NYSE:TAP) in the U.S.
What to watch: A-B has to decide before the end of the year if its wants to renew a soft-drink bottling contract with PepsiCo. If the brewer declines, it could be an indication that it has its eyes on SABMiller's deal with Coca-Cola in Africa.
Netflix (NASDAQ:NFLX) is continuing its international expansion this week, launching service in in France, Germany, Austria, Switzerland, Belgium and Luxembourg.
"This is the biggest international launch we’ve ever done,” says CEO Reed Hastings. "It represents nearly 80M broadband households and about 200M people."
International expansion is critical to Netflix's growth prospects. The company's current international investments, such as Latin America and the U.K., are on track to be profitable by the fourth quarter.