Flink raises $57M to boost financial inclusion in LatAm

Flink, a Mexico City-based neobroker, has raised $57 million in a Series B round of funding led by Lightspeed Venture Partners. The financing arrives six months after Flink raised $12 million in a Series A round led by Accel. Since its 2017 inception, the startup has raised nearly $70 million.

Neobrokers are defined as startups that are disrupting the investment industry by providing a platform for a wider range of consumers to partake in the stock market by offering them more incremental investment options and modern and easy mobile-based interfaces to manage their money.

Flink launched its app in 2018 with a wallet service, a digital and physical global debit card backed by Mastercard and, last year, it began offering the ability to buy and sell fractional shares from 30 pesos, without commissions, for NYSE-listed stocks.

“Users can invest as little as US$1 and with zero commissions,” Sergio Jiménez Amozurrutia said. “We want Flink to be the easiest way to invest, save and use your money.”

Source: LAVCA Tech Report 2021

“Users can invest as little as US$1 and with zero commissions,” Sergio Jiménez Amozurrutia said. “We want Flink to be the easiest way to invest, save and use your money.”

Since launching its first brokerage product in July of 2020, Flink has 1.6 million users, up from 1 million users at the time of its February raise. Over 85% of its users are first-time investors. 27% of the app’s clients are between 18 and 25 years old, while 22% are millennials.

The startup plans to use its new capital to keep growing its team, toward product development and to expand its service to different countries in Latin America.

“The lack of access for retail investing is all over LATAM, and at Flink we want to change that,” Amozurrutia told TechCrunch. “We are focused on offering the opportunity to invest and grow their money to everyone in LATAM.” (TechCrunch)

Goldman, BofA see lost decade over for Emerging Markets

Expectations for a recovery in commodity prices and earnings growth are igniting bullish bets on emerging-market equities after more than a decade of underperformance that left them approaching a 20-year low against developed-nation stocks.

Goldman Sachs Group Inc., Bank of America Corp. and Lazard Asset Management expect a boost for developing equities as investors capitalize on cheap valuations once vaccine rollouts pick up, helping the global economy to recover from the pandemic. South Africa, Russia and Brazil are among markets set to benefit, even as China’s regulatory crackdown continues to weigh on Asian equities.

In the decade following the global financial crisis, MSCI Inc.’s emerging-market stock index gained just 8%, while the benchmark for developed nations more than doubled. That’s partly due to the slowdown of Chinese economic growth from above 10% in 2010 to around 6% by the end of the decade, resulting in a decline for commodity prices and weak earnings growth.

Source: Bloomberg

Then came the pandemic. While stocks across the board initially recovered strongly from March 2020 lows, those in emerging markets have fallen behind again. MSCI’s developed-market stock index has returned about 16% since the beginning of 2021, while its emerging-market counterpart fell more than 4%.

That may change in coming months as the global economic recovery gathers steam, inflation picks up, and raw materials rebound from their worst weekly performance since June, driven by infrastructure projects from China to the U.S.

There are signs the turn has already started. “We expect this trend to continue given supportive macro drivers and equity valuations,” BofA cross-asset strategist Jure Jeric said in a note. (Bloomberg)

El Salvador readies Bitcoin rollout with 200 ATMs for conversion

El Salvador began installing Bitcoin ATMs, allowing its citizens to convert the cryptocurrency into U.S. dollars and withdraw it in cash, as part of the government’s plan to make the token legal tender.

The government will install 200 of the teller machines to initially accompany its digital wallet called Chivo, a local slang term for ‘cool,’ President Nayib Bukele said on Twitter. Transactions will be commission free, he said, adding that there will also be 50 financial branches across the country for withdrawing or depositing money.

Adopting Bitcoin will save Salvadorans $400 million per year in fees for receiving remittances from abroad, Bukele said.

El Salvador’s Bitcoin law will take effect on Sept. 7 and Salvadorans will be able to download the government’s Chivo digital wallet, enter their ID number and receive $30 in Bitcoin, Finance Minister Alejandro Zelaya said in an local TV interview on Monday. The government has created a $150 million fund to back Bitcoin to U.S. dollar conversions, he said. (Bloomberg)

Note: Selected countries. El Salvador and Costa Rica data from October-January not available.

Source: Chainalysis

What does Brazil’s new receivables regulation mean for fintechs?

Unlike in the rest of the world, when a credit card is used for payment in Brazil, the merchant does not receive the funds owed to them all at once. Instead, nearly 50% of card sales are completed in monthly installments, leaving the sellers to manage a difficult cash flow process.

The most common solution for merchants is that they end up selling the remaining receivable at a discount — taking less than they are owed — in order to get their money sooner. And we’re not talking about a small-volume market: Some R$2 trillion (Brazilian Reais) in card transactions were processed in 2020.

New rules from the Brazilian Central Bank will allow all payments by card to be registered in a unified central system, which certifies the existence of receivables, allowing the creditor to use these future payments as a guarantee for obtaining cheaper credit.

The new rules will directly impact the anticipation of receivables, and the credit offer to micro, small and medium-sized companies, a market with the potential to handle trillions, which may be explored by banks, fintechs, receivable funds, and others. According to the Central Bank’s data, the anticipation of receivables handles around BRL 50 billion per month.

The biggest change brought about by the Central Bank’s new resolution is that shopkeepers will now be able to organize and share their receivables schedule and negotiate it with more than one institution at the same time, increasing their credit limit. This is because institutions will only be able to retain as warranty the volume of receivables equivalent to the amount borrowed, instead of retaining the entire flow of receivables from the merchant, even if the amount borrowed was smaller, as usually was. In other words, a considerable volume of money that was retained before will be unlocked.

The monetary authority expects more competition in the receivables segment, reducing the spread and increasing the volume of credit granting, especially for small and medium-sized companies, which depend more on guarantees to obtain loans. (LABS, TechCrunch)

Peru’s Economy rebounds by record 42% after slump last year

Peru’s economy rebounded in the second quarter, shrugging off political and financial volatility as it recovers from one of the world’s deepest slumps last year.

Gross domestic product grew 41.9 percent in the three months through June from the same period a year earlier, the national statistics institute said Monday. The result was higher than the 41.5 percent median estimate of analysts surveyed by Bloomberg.

The rapid annual growth rate mainly comes from comparing activity to the second quarter of 2020, when the nation suffered the most severe contraction of any major economy. Peru’s lockdown to curb the pandemic was the tightest in the region according to mobile phone data collected by Google, and devastated the economy, though business rebounded when it was lifted.

Peru’s economy has been one of the fastest-growing in Latin America in recent years, even at times of political turmoil such as that experienced during the second quarter.

Sources: Instituto Nacional De Estadistica E Informatica De Peru; Bloomberg.

Since Castillo was sworn at the end of July, the currency has weakened the most among more than 24 emerging market currencies tracked by Bloomberg after Brazil’s real.

In his first week in office, Castillo said Peru needs to recover sovereignty over its natural resources and renegotiate its free trade deals, and rattled investors with some of his cabinet selections.

The country’s recovery is getting a boost from a rally in the price of copper this year, Peru’s biggest export, which hit a record high in May. (Bloomberg)

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