Trading Stocks and Buying Bonds in Brazil
March 15, 2010
I recently made a study regarding high yield bonds and found out that the Brazilian economy has the highest real interest rate of the world. Being curious I decided to look further into the Stock and Bonds Market in Brazil Market.
When I learned about Brazil before I often thought of high inflation, an economy in recession and an instable financial environment. After rating agency Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were imens. However in the last ten years the situation has dramatically changed and today Brazil is Latin America’s strongest economy and on its way to become one of the most influent economies in the world. The Brazilian currency Real is the most valuated compared to the dollar for three consecutive years and the Brazilian Stock Market rallied in 2009 almost 90%.
On the most important Brazilian Stock Exchange Bovespa investors can buy, sell and rent stocks, fonds and derivatives while the BM&F trades agriculture futures. Both exchanges have been merged a few months ago into BM&FBOVESPA.
The spectrum of investments is broad and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).
As a non-Brazilian investor I can basically apply the same investments as a local investor, however I would have to appoint a local representative in Brazil to be the responsible for my actions. As far as taxation is concerned foreign investors are tax-exempted unless they are resident in tax-free country.