About Fondul Proprietatea

Fondul Proprietatea is a joint stock company operating as a closed–end investment fund without a set lifetime, incorporated in Romania, trading on the Bucharest Stock Exchange since January 2011.

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17.04.2014
Update with respect to the RON 0.05/share cash distribution to shareholders
16.04.2014
Shareholder Structure as at 10 April 2014, considered as “reference date”
15.04.2014
31 March 2014 NAV report
15.04.2014
March 2014 Factsheet

Mark Mobius' Blog

10.04.2014
The Economic Cost of Brazil’s Spending Spree

mobius
Brazil has been on a spending spree during the past few years, which, unfortunately, has failed to generate meaningful growth and has led to negative economic consequences. In addition to the lavish spending in preparation for the FIFA World Cup™ this summer and the Olympic Games in 2016, Brazil’s national oil company has been spending billions of dollars on expensive offshore oil exploration, production and energy development. Resources have also been pumped into other enormous projects including a major petrochemical plant, as well as various social programs to benefit the lower-income population. Brazil clearly faces some headwinds, but we believe meaningful reform efforts that open up investment to the private sector could help the country get back on a more positive track and take some pressure off government resources. Brazil’s situation has become so critical that ratings agency Standard & Poor’s recently downgraded the country’s credit rating from BBB to BBB-, the lowest investment-grade rung, expressing the deterioration in the government’s fiscal position and a lack of confidence in its economic management. The announcement seems to have put more pressure on Brazil’s government to get its fiscal house in order. After the downgrade, Brazil’s tax department announced the government was considering increasing taxes to remedy lower-than-expected tax revenues. In February, Brazil’s minister of finance, Guido Mantega, had promised to cut public expenditures by US$18 billion during the year. However, he provided little detail about how he intended to do so. Most observers (including us) think that cutting government spending would be difficult if not impossible in the near term, given the looming presidential election in October. Brazil’s economic growth (2.3% in 2013 and the same is forecast for 20141) is not fast enough to generate sufficient capital to meet the infrastructure and social service needs of its young population. Government-controlled banks have been lending at a fast pace, but a good deal of it is not prudent, in our opinion, and could result in rising non-performing loans. Some observers believe the government might be required to inject more capital into those banks. This, of course, could lead to higher government debt-to-GDP ratios. Reform is critical, but it has been too slow since the political decision-making process in Brazil requires broad consensus and a lot of time for negotiations, in our view. Some reforms require amendments to Brazil’s constitution, and this needs two votes by full majorities of each of the houses of Congress, which are not easy to obtain given the wide differences between various interest groups coming from this vast country.   The Pendulum of Popular Opinion In 2013, demonstrations in a number of Brazilian cities targeted bus tariff increases, corruption and poor infrastructure. Until then, Brazil’s government had enjoyed high popularity because of low unemployment levels and a number of populist programs. At the beginning of 2013, President Dilma Rousseff’s approval ratings were high at about 70%, but dropped to 30% by the end of that year. Despite the popularity decline, a divided opposition could split the difference and hand Rousseff a reelection victory in October. Given Brazil’s rising government indebtedness, money is needed from the private sector to develop the country’s infrastructure. Current plans call for a large number of private sector concessions to be granted for highways, railways, international airports and other services. The 2016 Olympics is forcing the government to move faster. Airport management and upgrading is urgently needed to accommodate millions of expected travelers. In late 2013, I was happy to hear that the management of the inefficient Rio de Janeiro airport was to be turned over to a Singapore-based company. Other such contracts and concessions have been granted in other areas. Carnival—Brazil’s Housing Crunch My team and I traveled to Brazil in early March and our first destination was Rio de Janeiro, the magnet for millions of people during Carnival, a celebration ahead of the Christian season of Lent. While many locals leave the city to get away from the noise and traffic jams, others from all over Brazil and other parts of the world arrive for a week of fun and spectacle. The Carnival Ball at the iconic Copacabana Palace Hotel in the heart of Copacabana Beach kicks off the celebrations, which carry on into the wee hours of the morning. Then the action moves to the Sambodromo, a one-kilometer road lined with boxes and bleachers for 80,000 spectators where “schools” from various neighborhoods compete with their best floats, drummers and music in a spectacular procession. Outside on the streets of Rio in the neighborhoods all over the city, “blocks” consisting of hundreds and even thousands of celebrants gather to drink and dance to the music of their own samba bands. Of course, this results in lots of crowded streets and noise with the city’s cleanup crews in their bright orange coveralls and big brooms working round the clock to clean up the mess. Since many of them feel underpaid, their unions feel Carnival is an opportune time to demand higher wages, which is what we witnessed in one district where a large crew sat down on the job. Fortunately, the dispute was settled with city officials, with what I understand in that case, resulted in higher wage promises.  While driving on the beach road street in Ipanema, where the famous “Girl from Ipanema” song originated, I could see the slums (favelas) rising up the mountainsides overlooking the beach. I turned to my taxi driver and commented that the people living in those shacks on the mountainside had a terrific view, and that it was a shame so many lacked legal ownership of the land. If they did, they could improve their lot in life and with property prices on the rise, even sell the land for a nice sum someday. I was delighted when he told me a government program to give legal title to people inhabiting the favelas was seeing some progress. I think the ownership program is very important, as granting legal title can also unlock capital to improve...