Trading Stocks and Buying Bonds in Brazil
Last week I have made a research about high yield corporate bonds and discovered 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 Exchanges.
When I heard of Brazil in the past I always thought of high inflation, and an instable financial environment. After rating company Moody’s downgraded the Brazil to BB- in 1989 the consequences were imens. But in the last decade things have dramatically changed and today Brazil is the continent’s most stable economy and is becoming one of the most important economies in the world. The Brazilian currency Real is the most valuated compared to the dollar for three years in a row and the Brazilian Stock Market rallied in 2009 almost 90%.
On the biggest Brazilian Stock Exchange Bovespa investors can buy, sell and rent stocks, fonds and derivatives while the BM&F trades agriculture futures. Both exchanges have been merged recently into BM&FBOVESPA.
The spectrum of investment products is rich and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).
As a non-Brazilian investor I can basically buy or sell the same investments as a local investor, however I must appoint a local representative in Brazil to be the responsible for my investments. As far as taxes are concerned foreign investors are exempted from tax unless they are living in tax-free country.