Archive for July 22nd, 2015

The Pros and Con of Investing in Brazil07.22.15

In recent decades Brazil’s economy has suffered through some sharp ups and downs, but since 2003, it has been able to improve its marcoeconomic stability, build its foreign reserves, and reduce its debt by converting its economy to real denomination and domestic securities. By 2008 the country’s debt was given investment grade status by s pair of credit agencies. By 2010 Brazil had recovered to a positive growth mode.
The country’s economy offers varied investments opportunities. It is rich in natural resources. It has many off shore oil fields. It is second in the world in the production of iron ore. It can produce more ethanol than Europe and Asia combined. This allows them to produce a myriad of industrial and consumer goods.
Like any other country, Brazil has its own set of risk-reward factors that must be considered. Zeca Oliveira agrees that the room for continued growth makes it a desirable investment target. However, political instability and export-dependence can give investors reasons to be a little wary. Still, the Brazilian economy has outperformed the USA S&P 500 by more than 50% in the last five years.
On the strong upside Brazil’s inroads into the Chinese market has greatly aided them, So has producing its own oil, which has allowed them to avoid high oil prices. Brazil has stabilized its economy enough to be ranked as the 8th most productive in the world. They also have a growing technological sector.
The down side includes a volatile political history that sometimes results in different forms of corruption by officials in high positions. More than developed countries, Brazil is dependent on exports for many of its goods and services. It also relies on external financing sources. A sharp downturn for any reason could have a ripple effect on the country’s economy.
Investors like Zeca Oliveira agree that a major way to invest in Brazil is through USA listed exchange traded funds. Or you could go through the Brazilian stock exchange, MB&F Bovesp. To do this you would have to use local brokerage firm and register with the Brazilian Central Bank.

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