Trading Stocks and Buying Bonds in Brazil
A few days ago I have made a research about high yield fixed income and found out that the Brazilian economy has the highest real interest rate in the world. Being curious I decided to research further into the Stock and Bonds Market in Brazil Market.
When I heard of Brazil before I often thought of high inflation, a struggling economy and a weak financial market. After rating agency Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were disastrous. However in the last decade the situation has dramatically changed and nowadays Brazil is Latin America’s most important economy and is becoming one of the most important economies in the world. The Brazilian currency Real is the strongest currency compared to 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 lifestock futures. Both exchanges have been merged some months ago into BM&FBOVESPA.
The spectrum of investment products is rich 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 would have to appoint a Brazilian representative to be the responsible for my accounting. As far as taxation is concerned foreign investors are exempted from tax unless they are resident in a tax haven.
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