Ukraine’s Exports, Nubank’s Takeover, and Inflation in Argentina

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The news of Russia’s invasion of Ukraine prompted a flurry of remarks from Latin American politicians, ranging from explicit condemnation to avoiding direct criticism to even supporting the action, highlighting some of the region’s growing divide. Check out this up-to-date Wikipedia map with each country’s position.

According to the UN Comtrade, Ukraine and Russia export the vast majority of the world’s sunflower-seed oil, while Russia is the world’s leading wheat exporter. In 2020, Ukraine and Russia accounted for around 26% of worldwide wheat exports.

Naturally, we were curious about the trade flow between Latin America and Ukraine. To help visualize our findings, we charted the value of goods that Ukraine exported to Latin America countries in 2020, including the top product category for each. We would’ve never imagined that the Dominican Republic is Ukraine’s top partner in the region.

Nubank added 20.6M new customers worldwide in 2021. That’s an average of 56K every day. And even though it has much catching up with the bigger banks — BBVA and Santander — its future looks promising. For example, another way of looking at the numbers is that Nubank added ¼th of BBVA’s entire customer base last year.

However, its stock hasn’t been doing as well since it began trading in December — it’s currently trading at 13% below its IPO price. This illustrates how volatile the markets are: Nubank was the most valuable bank in Latin America at the end of 2021; today, BBVA, Itaú, and Santander currently have higher market caps.

The drop may be encouraging news for some investors, the greatest investor of all time, Warren Buffett, for one. The oracle of Omaha doubled his position on $NU from $500M to $1B this year. And it makes sense. When looking at the company’s financials, there’s a lot to like. It generated $1.7B in revenues last year, a growth of 130% compared to 2020; it also reported that 2021 was its first profitable year. Nubank is currently only present in Brazil, Mexico, and Colombia, but stay tuned as they try to conquer the entire region.

About a month ago, Argentina and the International Monetary Fund (IMF) reached an agreement to extend the repayment timeline of a debt of more than $40B that Argentina owes the IMF. Argentina is the IMF’s largest borrower. Under the new agreement, Argentina will get a four-and-a-half grace period to pay back. At the same time, it promised to attempt to fix its balance sheet of government spending back home.

Historically, Argentina has struggled with populist governments spending more than the economy can generate — leading to money printing and thus inflation — for decades. In the last 60 years, the country has only had a 6-year period in which spending was less than its income; from 2003 to 2008. International raw material prices were at a record high during that period and generated significant returns. However, it’s been dealing with an outrageous 29.6% average inflation per year for the last decade. A dollar was worth 4 Argentinian pesos 10 years ago; today it’s worth 107.

To stabilize the situation, last October, secretary of internal trade, Roberto Feletti, issued a decree fixing the prices of 1,432 products. However, that’s not a sustainable solution since price-fixing causes industries to suffer lower margins, reducing incentives to do business.

Starting this week, we will feature opportunities in our newsletter. Our mission is to connect you with exciting possibilities to take your career to the next level and be part of those realizing LatAm’s potential.

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The comment of the week comes from our water accessibility chart and talks about the secondary water industry in Mexico:

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