Trading Stocks and Buying Bonds in Brazil
A few days ago I have made a study regarding high yield corporate bonds and discovered that the Brazilian economy has the highest real interest rate of the world. Being curious I decided to research further into the Stock and Bonds Market in Brazil Market.
When I heard about Brazil in the past I often thought of high inflation, and an instable financial market. After rating company Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were far-reaching. But in the last ten years the situation has dramatically changed and today Brazil is the continent’s most stable economy and on its way to become one of the most important 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 interest futures. The exchanges have been merged some 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 a non-Brazilian investor I can basically make the same investments as a local investor, however I would have to 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 tax-free country.