Weekly Update | January 28, 2011

Corporate money is flowing into Brazil to take advantage of one of the greatest emerging consumer market opportunities of all time.

In Brazil, a $40 billion telecom industry is still buzzing with inbound M&A activity lately. Portugal Telecom signed an agreement to buy 22.38% stake in Brazil’s largest fixed-line telecom operator, Tele Norte Leste Participacoes SA (NYSE:TNE), for BRL 8.32 billion (or $4.98 billion). Japan-based network services provider, NTT Data Corp., stated that it will spend JPY 300 billion (or $3.7 billion) on acquisitions, with companies having a strong presence in Brazil being the primary targets. Brazil recorded foreign direct investment of $15.4 billion, against expectations of just $5 billion in December 2010. The country’s strong domestic consumption story should continue to attract foreign capital and spur economic development over the next few years.

Shell's venture with Cosan will mark the biggest-ever foray into biofuels by an oil major. The venture, which would create the No. 3 fuel distributor in Latin America's largest country, underscores cane ethanol's lure as an alternative to gasoline. The 50-50 joint venture, with almost 4,500 filling stations nationwide, will better position Cosan and Shell to compete with the two top players on the Brazilian fuel distribution market, state oil giant Petrobras and Ipiranga, a unit of Brazil's Grupo Ultra. Brazil's largest sugar and ethanol group, Cosan, said in a preliminary earnings report that quarterly net operating revenue rose 24 percent from a year earlier, boosted by strong sugar and ethanol prices and sales.

Over the last week, the top performers in our newsletter service were:

• NII Holdings Inc.(NasdaqGS: NIHD) +6.7%
• Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) +4.9%
• Petrobras Energia Participaciones S.A. (NYSE:PZE) +4.9%
• Telefonica S.A. (NYSE: TEF) +4.3%
• Banco Santander (NYSE:STD) +3.8%