A most contrarian style brings positive results
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Judith Rehak International Herald Tribune
January 20, 2003
Investors in emerging markets are by definition contrarians, but Rajeev Bahman, manager of the Oppenheimer Developing Markets Fund, takes things a step further. His portfolio surged 12.7 percent in the fourth quarter, despite a strategy that often shuns the most popular markets and stocks in this volatile sector, and sticks with others that many investors avoid.
A case in point, Russia’s oil producers were some of the biggest winners this year, though not for him. ‘‘The reason for Russia’s success is the very high oil price, which I don't think is sustainable,’’ he said. ‘‘If prices go down, the rose-colored vision will be altered.’’
His stake in South Korea is only 11 percent, compared with 20 percent for most funds, and notably missing is Samsung Electronics Co. ‘‘To be frank, indexes were never a basis of my decision-making,’’ said Bahman, a bottom-up stock-picker. As for Samsung, he said, ‘‘It’s in everyone’s portfolio, and if everyone owns it, it’s highly unlikely that you'll do better than they will.’’
Where Bahman has done well lately is in Brazil. While investors panicked over the prospects of a new, left-leaning president and bailed out in droves, he hung on to his positions in companies ranging from Empresa Brasileira de Aeronautica SA, or Embraer, the air craft maker, to consumer-oriented telecom plays. His perseverance paid off handsomely when President Luiz Inacio Lula da Silva appointed a well-respected economic team and promised to exercise fiscal discipline, causing Brazil’s stock market to rally 32 percent from its mid-October low of the fourth quarter.
But country-wise, Bahman’s biggest bet is an outsized 22 percent on India. ‘‘It’s a market with excellent opportunities, good prices and where returns are improving while the cost of capital is falling,’’ he said. Like many investors, he likes India’s software outsourcing sector, noting that despite the slower U.S. economy the sector continues to grow at 20 percent to 30 percent a year. But instead of Infosys Technologies Ltd., the outsourcing company that is a staple of emerging markets portfolios, he owns NIIT Ltd., which trains workers for that industry. Demand is growing rapidly for such people, he said, adding, ‘‘NIIT’s competitors got in too late and lost out when they promised more than they could deliver.’’ NIIT shares zoomed 44 percent in the fourth quarter.
Bahman also likes stock-specific plays in rocky markets that are avoided by most investors.
His stake in Jollibee Foods Corp., the Philippine equivalent of McDonald’s, surged 30 percent in the quarter, even though the market plunged 20 percent.
Always on the outlook for new contrarian plays, Bahman has been building a 3 percent position in Egypt, where the economy is stagnant and there are fears of currency devaluation. A favorite is Eastern Tobacco Co. ‘‘It has a 25 percent return on equity, a good dividend and no significant competition,’’ he said. ‘‘They’re moving to another factory and their old one in downtown Cairo is worth their market cap, so that’s more value.’’
___________________________ For more information:
OPPENHEIMER DEVELOPING MARKETS FUND. Web site: www.oppenheimerfunds.com
Brazilian president ends controversy, appoints bishop to food council
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SAO PAULO, Brazil (CNS) -- Brazilian President Luiz Inacio Lula da Silva has appointed a bishop to the national food council, ending a period of tension between the new government and the church. Da Silva appointed Bishop Mauro Morelli of Duque de Caxias to the council after a government official told the bishop that an evangelical church member of the council had vetoed the bishop's inclusion. Bishop Morelli said he had always maintained a cordial relationship with the evangelical community and doubted that it had blackballed him. Da Silva, who last year asked the bishop to head the council, ended the controversy by appointing him a member. The bishop said some tension and conflict are natural at the beginning of every administration.
Brazil to re-export or burn US GM corn cargo
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BRAZIL: January 20, 2003
SAO PAULO, Brazil - Brazil's Agriculture Ministry said last week a shipment of U.S. corn found to contain traces of banned genetically modified organisms will have to be burned, re-exported or used for paper production.
Odilson Ribeiro, Director at the ministry's plant safety department, said the shipment of 7,400 tonnes of U.S. corn at the port of Itajai in Santa Catarina state tested positive for trace amounts of genetically modified material, which would preclude its use in animal or human foods or for planting.
Tests run by the ministry turned up 0.25 percent GM material in the shipment.
The importer, National Starch Chemical Industrial, which produces corn starch for industrial foods and for paper production, is contesting the finding, telling the financial daily Valor that the U.S. corn is certified as GM-Free.
A company representative was not available for comment and the paper did not say for what purpose the corn was intended.
Jose Valerio, president of the firm, also told the paper that the level of transgenic material in the corn was at most 0.1 percent, putting it well within the legal 4 percent limit permitted by Brazil before the product can be considered genetically altered.
Brazil bans any commercial or experimental use of genetically modified food crops. The country's growing livestock industry has also been struggling with a 1 million
Washington turns a blind eye to Brazil
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By Sebastian Edwards
Published: January 19 2003 20:36 | Last Updated: January 19 2003 20:36
The election of Luiz Inácio Lula da Silva as Brazil's president has given Washington a unique opportunity to engage seriously with the biggest country in South America. Improved relations with Brazil - including genuine progress towards a free trade agreement - would dramatically change the political and diplomatic landscape of Latin America. Indeed, after a US-Brazil trade accord, the rest of the region would follow swiftly and the Free Trade Area of the Americas - until now an elusive goal - would rapidly become a reality.
But not everything is about trade. If Brazil were to become a close ally, it would be much easier for the US to tackle other tricky Latin American issues, including increasing political instability in Venezuela and implementation of an effective anti-narcotics policy for the region. It would also be easier to tackle the increasing use by Islamic terrorists of the triple frontier of Argentina, Brazil and Paraguay as a financial centre.
Unfortunately, the Bush administration has failed to grasp this opportunity. Indeed it has done little to signal any interest in forging closer ties with Brazil. Diplomatic circles were astonished to find out that no senior US cabinet member attended Mr Lula da Silva's inauguration this month and at last week's nomination of Roger Noriega - the little-known ambassador to the ineffective Organisation of American States - as the senior state department official responsible for Latin America. Indeed, the nomination of Mr Noriega - a staunch anti- communist who once served as an aide to former Senator Jesse Helms and who has little expertise beyond central America and Cuba - is a snub to the large Latin American countries. The nomination can be interpreted only as a political move aimed at pleasing the anti-Castro Cuban community in South Florida.
But it is not too late for the US to change course. The administration should recognise its mistake and withdraw Mr Noriega's nomination. It should then nominate a truly senior figure with deep knowledge and understanding of the region and in particular of Brazil. And if the administration is unwilling to do it, Senator Richard Lugar, the highly respected chairman of the Senate's foreign relations committee, should step in and ensure that Mr Noriega is not confirmed to such a critical post.
While not openly anti-American, many Latin Americans - and in particular many Brazilians - have traditionally been suspicious of US goals in the region. Some believe that Washington intends to impose its own policies, without much regard for domestic views; others worry about the implications of US protectionism. These concerns have been exacerbated by recent US protectionist policies on steel and agriculture.
Because of this deep suspicion, Brazilian politicians have traditionally taken a cautious approach towards relations with the US. Indeed, most Brazilian political leaders have feared that voters could interpret overtures towards Washington as a sign of weakness and of catering to American interests. As a result, Brazil's diplomatic relations with the US have historically been cold, awkward and distant.
With Mr Lula da Silva at the helm, however, this difficult relationship could change for the better. With his impeccable left-wing credentials and his past as a trade union leader, no one could possibly accuse Mr Lula da Silva of being pro-capitalist or of giving in to pressure from multinational corporations. He is thus uniquely positioned to initiate open, frank and productive negotiations with the US that go beyond the usual rhetoric. This is a chance to make real headway on bilateral and hemispheric issues.
During his first few weeks in office Mr Lula da Silva has given positive signals. Contrary to the fears of many Wall Street analysts, he has appointed a solid economic team. He clearly intends to pursue economic modernisation and his administration will welcome foreign investment. Indeed, after years of seeking the presidency, Mr Lula da Silva is aware that fiscal discipline, low inflation and honouring debt commitments are the prerequisites for sustained growth in any modern economy. He is also aware that without robust growth there is no chance that his social programmes will succeed.
All of this is good news, not only for Brazil but also for Latin America as a whole. The best way to make sure that Mr Lula da Silva keeps his promises is for the US to treat him seriously and to bring him to the table to discuss a free trade agreement that would dismantle protectionist measures in both countries. This, however, would require the White House to appoint a first-rate diplomatic team to deal with Brazil and the rest of Latin America. Mr Noriega simply does not make the cut. As the experience of the North American Free Trade Agreement has shown, enhanced trade is not only good for the economies involved. It also brings closer diplomatic ties and forges support in the world diplomatic arena. And more and better friends are one thing the US needs as the crises in Iraq and North Korea deepen.
The writer is a professor of international economics at UCLA's Anderson graduate school of management. From 1993 to 1996 he was the World Bank's chief economist for Latin America
Latin Notes: Brazilian Gil carries on Marley's reggae style
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San Antonio Express-News
Web Posted : 01/19/2003 12:00 AM
Reggae legend Bob Marley would be pleased to see his legacy being carried on so ably by his old dissident friend, Brazilian singer Gilberto Gil.
A Green Party activist, Gil made the leap from outsider to establishment in January when Brazil's new president, Luiz Inacio Lula da Silva, appointed him culture minister.
Though he's a cabinet official now, Gil said he plans to continue touring on weekends. His latest album is the Marley tribute "Kaya N'Gan Daya," which includes "Buffalo Soldier," "One Drop" and "Could You Be Loved."
Recorded at Marley's Tuff Gong studios in Jamaica, "Kaya N'Gan Daya" features backing vocals by Marley's I Threes (Rita Marley, Marcia Griffiths and Judy Mowatt). Gil and the Marley family maintain close ties.
"I have a great deal of affection for his work," Gil said. "Since the beginning, I've followed everything he did. I have a big interest in reggae because of the freshness and novelty it represented. I've followed many other reggae artists, but I think Bob was the most inspired in musical and political terms."
Contemporaries in 1970s musical explorations and socialist politics, Gil and Marley were among the best-known world music artists of their day.
Gil recorded a hit Portuguese cover of Marley's "No Woman, No Cry," titled "Não Chore Mais," in 1977. "Kaya N'Gan Daya" contains a new version of the track, with backing band Paralamas do Sucesso providing Brazilian flavor.
"In English, it's about poverty, police harassment and the struggle for integration into society," Gil said. "When I translated it into Portuguese, we were in the last years of a dictatorship in Brazil. We also had difficult times with the police and people being tortured and killed. I used this song to address what was happening in society and our need for freedom, but in a different context."
Both suffered for their convictions. Marley, who died of cancer in 1981, was nearly killed in a 1976 assassination attempt. Gil, 60, lived in exile in England from 1969 to 1972.
Eliades Ochoa
Music that makes people dance, that's evocative of place and performed by real people will always delight, says Santiago, Cuba-born singer and guitarist Eliades Ochoa.
Traditional acoustic Cuban music satisfies on all three counts.
"I've always liked that type of music," Ochoa said. "I feel it more. It transmits a more direct message and says more things. If you need to seduce a girl, a bolero will say everything you want to, and at the end she'll tell you yes or no. If you want to liven up a party, you just break out the guitar and play a son."
Ochoa, 54, recently released "Estoy Como Nunca," which revives old Cuban chestnuts, much like the 1998 "Buena Vista Social Club" project with which he was involved.
Cuban roots have captured the attention of American artists — recent releases by Los Super Seven ("Canto") and Rick Treviño ("Mi Son") reflect the influence and include Cuban musicians and arrangers.
Now, Super Seven members David Hidalgo (Los Lobos), Cesar Rosas (Los Lobos) and Raul Malo (The Mavericks) return the favor. Hidalgo plays guitar on the album's title track and Malo singing lead vocals on "No Me Preguntes Tanto," which he co-wrote with Dennis Britt.
"Traditional Cuban son has boomed since the 'Buena Vista Social Club' movie came out," Ochoa said. "So that music is better than ever, and so am I, thus the title 'Estoy Como Nunca.' ('I'm Better Than Ever')
"I love the rhythm and harmony on the title track. Its style and body really get my attention. It's a song that was popular in Cuba in the early 1960s, but since then has practically been forgotten. So I decided to rescue it. Almost all the songs I recorded are from the 1950s and 1960s and even the late 19th century."
With his four-piece band, Cuarteto Patria, Ochoa carves out an earthy, rhythmic soundscape comprising double bass, acoustic guitar, hand percussion and two trumpets.
The final track, "Sus Ojos Se Cerraron," poignantly describes the death of a loved one. Originally written as a tango by Alfredo Le Pera and Carlos Gardel, the early 20th century Argentine star, the touching song is recast by Ochoa as a bolero, with his guitar the only accompaniment.
"Tangos have a certain melancholy feel and they have such lovely lyrics," Ochoa said. "'Sus Ojos Se Cerraron' is incredible. Few people can write such great lyrics; it's as if they put you in their shoes."
Ramiro Burr's column appears on Fridays in Weekender and on Sundays in Culturas. For questions or comments, call him at (800) 555-1551, ext. 3429, or e-mail rburr@express-news.net.