Credit where credit’s due — when we asked whether Chinese Fintech could jump-start Latin American digital finance four months ago, DigFin’s Jame DiBasio immediately emailed us asking “What about Nubank in Brazil?”
On Monday, China’s Tencent revealed they were asking similar questions, paying $180m total to buy 5% of Brazil’s Nubank. The investment — $90m in stock purchases from existing owners and $90m in new money — values the online-only bank at almost $4b, making it the biggest startup in Latin America.
In addition to giving Nubank a capital buffer to allow it to expand its loan book, the deal gives the digital bank to the know-how behind WeChat Pay, one of the world’s largest digital financial services platforms. Additionally, Tencent’s work on machine learning and managing big data will allow Nubank to use the wealth of information it has about borrowers to fine-tune products for its clients — and maximize profits for itself.
The reaction from China was simple: “Who is Nubank?” (腾讯2亿美元入股的巴西Nubank，是何方神圣？) This is Tencent’s second deal in the region after Argentina-based Satellogic, which Tencent led two rounds of investment in starting in 2015. But while Nubank is bigger, it struggles with what many Chinese investors see in Latin American opportunities — it’s limited to one country. Despite being Colombian, Nubank President David Vélez says he has no plans to expand elsewhere in Latin America. Yet in a country where bank loans to the private sector remain well below 50% of GDP, and incumbent bank margins are some of the fattest in the world, there’s plenty of room for Nubank to grow.
Observers in China also note that the acquisition of Nubank is part of Tencent’s efforts to evolve from a company serving companies to one serving people (腾讯入股巴西Nubank，一场2B2C的试炼). As Tencent president Martin Lau says: "Tencent’s mission has also changed: from a good connection service provider to the most personal digital assistant in all industries."
But the biggest benefit for Tencent may be in showing shareholders its doing something about a share price that has dropped 38% this year, erasing $220b in value. Buying into a new country can show that Tencent is diversifying from struggling core verticals. Or, as was put in an interview with Tencent investment management partner Li Zhaohui, the “pain” and “change” of a new market is necessary (腾讯的“痛”与“变”：从重金频投海外科技金融说起).
Minera china participará de explotación de litio chileno— Semanario Universidad
Chilean obstacles to Tianqi Lithium’s $4b purchase of 24% of SQM fall away with a ruling by trade court Tribunal de la Libre Competencia (TDLC) this week.
Capitales chinos impulsarán la manufactura de acero en Perú— Macro Trade News
Acero Norperuano, said to be backed by Chinese owners, is investing $300m in a steel plant in the Paita Economic Development Zone in Peru.
Superfoods Peru has netted $42m in sales for Peruvian producers to South Korean and Chinese clients.
North Korea’s APT38 have been identified as the group behind the hacks of Bancomext and Banco de Chile earlier this year.
Seade: no hay mercado para un TLC con China— El Sol de México
La 'gran lección' de comercio para Trump: China no es México— El Financiero
USMCA: en este club no cabe China, ¿qué haremos?— El Economista
Los sectores en México que ganaron y los que perdieron con el USMCA— Dinero en Imagen
Mexico is still digesting NAFTA 2.0. Jesús Seade, who was AMLO’s point-man on NAFTA negotiation and may yet be Ambassador to China, sees a lot of ground for Mexico and China to grow closer together, without the need for an FTA. Certainly the agreement is expected to increase Chinese investment in the Mexican auto sector. But whether it will allow for an FTA is still unclear.
Chinese corporates still struggle with dealing with institutions and civil society in Latin America. Twenty-one NGOs from Argentina, Brazil, Bolivia, Ecuador, and Peru representing 18 projects — 7 mining projects, 6 oil projects and 5 hydro projects — have taken Chinese companies before the UN High Commission of Human Rights. While unlikely to stop the projects anytime soon, this cannot endear these companies to civil society in these countries.
With the Annual Meetings of the IMF and the World Bank this fall, another World Economic Outlook is out, and Latin American growth is downgraded again. Regional growth for the year is now expected to be 1.2% — weighed down by zero growth in South America — and the boost provided by China is counteracted by the trade war.
China rejeita acusações de interferência política nos EUA— Agência Brasil
El Salvador defiende decisión de abrir relaciones con China— El Nuevo Herald
Guerra comercial entre EE.UU. y China obliga a Chile a buscar nuevos mercados— El Economista América
Speaking of the trade war. If Brazil can get Chinese tariffs lifted, sugar exports could be a big winner.
China — LAC
Fabricantes chinos de televisores aumentan inversiones en México— People’s Daily
TCL and Hisense are looking to make more TVs in Baja California.
Auge chino— Construcción LatinoAmericana
Construction Latin America talks with China Shantui’s Devin Zhou about the “Chinese boom."
El Belt & Road impulsa las inversiones chinas en LATAM— Dirigentes Digitales
A look at whether the Belt & Road Initiative can drive infrastructure in Latin America.
Los dientes de China con Cuba y Venezuela— Efecto Cocuyo
A look from Lara at how deep China has its “teeth” in Cuba and Venezuela.
China, de la soja a la carne— Clarín
Argentina is exporting soy, beef and — after they sign a protocol by the end of November — pork to China.
"In the first half of 2017, Chinese investors constituted more than half of all applicants to Antigua’s Citizenship by Investment program"
Pequim ganha espaço no canal do Panamá— Jornal do Comércio
A profile of China’s expanding presence in Latin America.
Brazil’s likely next president, Jair Bolosonaro, criticizes the sale of electricity assets to Chinese firms, particularly the sale of CPFL Energia to State Grid.
Peru project planned – Chinese contractor to construct — World Highway
China Railway has been awarded a $375m project to upgrade the road between Huallanca and Huánuco in Peru.
Shandong Linglong Tire has signed a deal with Sunset to distribute its tires in Brazil and Paraguay.
Crushers in Brazil are running out of soybeans amid tougher competition from Chinese buyers.
Meatpacker JBS is investing R$45m ($12m) in Minas Gerais to feed the growing Chinese market.
Argentine Ambassador to China Diego Guelar is ringing the alarm on Argentina’s current account deficit.
The beautiful game makes beautiful friends.
Korea — LAC
Visita de embaixador da Coreia do Sul celebra cooperação com a UFMG— Universidade Federal de Minas Gerais
Korean Ambassador to Brazil Kim Cham-woo visits Minas Gerais’ Federal University.
Korea-Pacific Alliance Forum — Korea Times
On the sidelines of discussions of Korea’s joining the Pacific Alliance, Mexico and Korea are buttoning up deals on fighting protectionism, economic cooperation, and fintech this week.
Ahora Pemex importará gasolina coreana— Forbes México
Lack of domestic processing means that Pemex now is beginning to import gasoline from Korea’s Hyundai Oilbank.
Korea Trade-Investment Promotion Agency (KOTRA) led a trade delegation to Caracas. Good luck with that.
Japan — LAC
Habrá buenas relaciones entre Japón y México: Marcelo Ebrard— El Economista
Inversión japonesa no teme a transición— Diario de Querétaro
Continuing the goodwill tour, Mexico’s expected foreign Minister Marcelo Ebrard says Japanese companies have nothing to fear from an AMLO government.
Argentina is pushing its beef in Japan.
Impulsan comercio entre Perú y Japón— El Peruano
Peru and Japan met in Lima to help smooth commercial relations between the two countries.
Japan Oil, Gas and Metals National Corporation (JOGMEC) is financing $1m of E&P work in Humamantata in exchange for the option to 60% ownership of the Panoro E&P firm.
Japan’s Sumitomo Corp said on Tuesday that it had acquired the remaining 35-percent stake it did not already own in Agro Amazônia, a leading agricultural products supplier in Brazil’s No. 1 soy producing state of Mato Grosso. Terms were not disclosed.
India — LAC
Chile greatly reduces focus on U.S. apple market, boosts exports to Europe and India — Fresh Fruit Portal
Chilean apple exports to India have more than doubled from 24,000 MT to 56,000 MT.
India-Latin America-Caribbean trade & investment growing — Fresh Plaza
V K Singh Visits Colombia To Deepen Bilateral Ties — Business World India
Minister of State for External Affairs General V K Singh led a delegation to flog Indian SME products in Colombia.
ASEAN & Oceania — LAC
Brazilian Ambassador to Indonesia Rubem Corrêa Barbosa gives his first-person perspective of the terrible earthquake and tsunami to hit there.
GCC — LAC
UAE, Mexico boosting parliamentary relations — Gulf Today
UAE Ambassador to Mexico Ahmed Hatem Al Minhali met with Senator Cora Cecilia Pinedo Alonso, the new President of the Foreign Affairs Asia - Pacific - Africa Commission at the Mexican Senate.