A few days ago I have made a research about high yield bonds and discovered that the Brazilian economy has the highest real interest rate in the world. Being curious I decided to look further into the Brazilian Stocks and Bonds Market.
When I learned of Brazil before I often thought of high inflation, a struggling economy and an instable financial environment. After rating agency Moody’s downgraded the Brazil to BB- in 1989 the consequences were imens. But in the last ten years things have dramatically changed and nowadays 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 strongest currency against 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 trade stocks, fonds and derivatives while the BM&F trades lifestock futures. The exchanges have been merged some months ago into BM&FBOVESPA.
The spectrum of investments is rich and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).
As a foreign investor I can basically do the same investments as a local investor, however I must appoint a Brazilian representative to be the responsible for my accounting. As far as taxes are concerned foreign investors are tax-exempted unless they are resident in an offshore jurisdiction.
