Progressive Rants and Raves

Last week I have made a research regarding high yield fixed income and found out that the Brazilian economy has the highest real interest rate of the world. Being curious I decided to research further into the Brazilian Stocks and Bonds Exchanges.

When I learned of Brazil in the past I often thought of a devaluate currency, an economy in recession and an instable financial market. After rating company Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were far-reaching. However in the last ten years things have dramatically changed and today Brazil is the continent’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 biggest Brazilian Stock Exchange Bovespa investors can trade stocks, fonds and derivatives while the BM&F trades currency futures. The exchanges have been merged a few months ago into BM&FBOVESPA.

The spectrum of invest vehicles is manifold and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).

As an investor from oversea I can basically make 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 exempted from tax unless they are resident in an offshore jurisdiction.