Brazil: A Rare Latin American Investment Opportunity
It is not very often that investors get the chance to invest in a Latin American nation as solid as Brazil. After its stock market’s have surged nearly 100% year to date, the economic fundamentals of the nation have been solidified. Brazil is a country that has earned your long term investments.
Monetary Policy
One of the largest differences between Brazil and other Latin American nations is its dedication the monetary policy. The central bank has kept interest rates high, currently 8.75% which has helped to propel the real to within a mere 6% of its all time high against the dollar. The Real is now in line with its price from last summer.
Brazil’s Economy
Brazil has a very strong consumption economy driven by modest commodity exports to other nations. Exports make up less than 13% of the economy, thus Brazil has only modest ties to the financial wellbeing of other economies. This may be one of the reasons Brazil was one of the last to enter recession and the first Latin American and one of the first G-20 nations to exit recession. Brazil had its first of two quarters of negative growth in the 4Q of 2008 and by the 2Q of 2009 growth had already returned.
Why Buy Brazil?
Of all the Latin American nations, Brazil has it right. Strong monetary policy, an independent economy and plenty of commodities at their disposal makes Brazil the perfect blend. As if 95% appreciation in the stock market wasn’t enough, Brazilian stocks trade at a PE of 15, making them an excellent value play as well.
It’s rare that anyone looks to South America for investing. Great tip.