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Chinese investors hit the break on investments in Brazil

Brazil manufacturing
LatAm   This year projects with Chinese capital accounted for only $1.3 billion

After the recent investment boom in Brazil, Chinese companies are hitting the break and taking time to "digest" their billion-dollar acquisitions in the country.

Between 2016 and 2017, spending was of at least $22.6 billion (equivalent to R$ 92.4 billion in the present currency exchange), according to data from Datalogic consultancy, which don't take into account transactions with undisclosed amounts.

This year, however, projects with Chinese capital accounted for only $1.3 billion (R$ 5.3 billion), according to a study from the Brazilian government - which has been tracking the indicator only since last year.

One of the reasons for the decrease is the fact that many of the big Chinese businesses are already settled in Brazil, and now they are going through a consolidation phase, says Renato Ajimura, superintendent of Japanese bank MUFG, one of the main financial advisors for Chinese companies abroad.

"Also, there are fewer assets in the market this year," he says.

Lack of infrastructure government auctions, in the middle of an election year, is one of the main factors for the investment slow down, according to Daniel Lau, a partner at KPMG, the consultancy responsible for the Chinese projects.

Despite the hindrances, there is one common agreement: China didn't lose its appetite for Brazil, especially regarding infrastructure, and there is space for companies still out of the country to make significant acquisitions.


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