The Worldview Guide to Investing in Brazil


Worldview Podcast: Not Just BRICs and Mortar

In recent years, Brazil has been touted as one of the most promising and fastest growing emerging markets for investors. Although growth has recently slowed down, events such as the 2014 World Cup and 2016 Olympics still on the horizon may recharge the market. Geoffrey Pazzanese, Vice President of Federated Global Investment Management, gives an overview of Brazil's current and potential investment opportunities.

Notable facts about Brazil:

  • With the upcoming 2014 World Cup, Brazil will increase its investment in civil infrastructure, transportation, and stadiums.
  • Public housing is one of Brazil's largest investments at R$ 1 trillion (BRL).
  • The poverty level is at 26%, in line with India and higher than Mexico.
  • By 2014, the poverty rate as a percentage of the share of population is expected to be below 10%. (In 2003, it was 30%).
  • The recent rise in the middle class has increased consumer spending on items like white goods, cars, clothes, and homes.
  • Ease of doing business in Brazil is relatively poor because of heavy bureaucracy and a shortage of lawyers to help cut through the red tape. This is a major hindrance of growth.

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Update on Brazil: More Than a One-Note Samba, But Changing Key

Worldview first covered Brazil in the Winter 2009 edition of The Investment Professional. At the time, when it was not entirely clear that the dramatic crash of late 2008 had fully run its course, this column argued that investors willing to invest or hold on to their Brazilian exposure would likely find their patience rewarded. There were several arguments in favor of Brazil:

  1. Extensive Brazilian experience in surviving and adapting to economic shocks.
  2. Large foreign reserves and manageable debt loads, shielding Brazil’s government from fiscal and political crisis.
  3. Highly professionalized fiscal and monetary authorities.
  4. A substantial domestic sector that could buffer reduced international demand.
  5. A more diversified export base than generally appreciated by most investors.
  6. (Exports diversified by both export destination and industry.)
  7. Foreign investors predisposed to run at the first sign of trouble in Brazil, providing an opportunity to enter at attractive valuations.
  8. Attractive correlation (i.e., diversification) features.

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Surfing the Tsunami: Brazilian Markets and the Global Crisis

Brazilians often point out proudly how blessed their land is. “Brazil has no natural disasters: no earthquakes, no tornadoes, no volcanoes, no hurricanes,” they say. Some add, chuckling lightly, “Our disasters are all man-made!”

The financial crisis engulfing the globe has arrived recently on Brazil’s shores. Brazil is no stranger to financial and political stress; indeed, over the last thirty years, the country has endured debt crises, extended hyperinflation, currency crashes, seven currency changes, economic recession, unemployment, the transition from military to civilian government, presidential resignation to avoid impeachment, banking failures, and, more recently, a period of rapid domestic and export growth that breaks with traditional experience. The consistent theme throughout these challenging years has been Brazil’s resilience: both economic and social.

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Investing in Brazil


Brazil on the RiseBrazil is a country that has become an industrial and agricultural superpower in the world market. However, it is a country still not well known to many and “hardly on the radar screen" to most Americans. Larry Rohter’s new book, Brazil on the Rise: The Story of a Country Transformed, is an excellent introduction to Brazil. He was in Rio de Janeiro for 14 years as a correspondent for Newsweek and the New York Times.
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