Trading Stocks and Buying Bonds in Brazil
I recently made a research regarding high yield fixed income and found out that Brazil has the highest real interest rate in the world. Being curious I decided to research further into the Brazilian Stocks and Bonds Market.
When I heard about Brazil before I always thought of high inflation, a struggling economy and an instable financial environment. After rating company Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were far-reaching. However in the last decade things have dramatically changed and today Brazil is Latin America’s most stable economy and is becoming one of the most influent economies in the world. The Brazilian currency Real is the strongest currency against the dollar for three years in a row and the Brazilian Stock Market rallied in 2009 almost 90%.
On the most important Brazilian Stock Exchange Bovespa investors can buy, sell and rent stocks, fonds and derivatives while the BM&F trades currency futures. Both exchanges have been merged a few months ago into BM&FBOVESPA.
The spectrum of invest vehicles is rich and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).
As a foreign investor I can basically apply 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 exempted from tax unless they are resident in a tax haven.
