The Financial Times (FT) recently published a special 10-page report into Brazil investment opportunities. The overwhelming conclusion in the report is that Brazil currently offers some of the very best potential for investment (in property, equities or direct investment).
The FT report, which covers a wide range of topics on Brazil, was published to coincide with the visit to London by the Brazilian President, Lula da Silva, last week. The lead article opens with the reflection that the Brazil’s successful Olympic bid “seemed to confirm that after years of underperformance and self-doubt Brazil’s time had come at last”. The feature highlights Brazil’s “enormous potential, its tremendous natural and human resources” that “are at last bringing within its grasp the bright future”.
The report reviews various aspects of Brazil’s economy and banking system, both of which are currently the envy of most Western economies. The advantages Brazil offers are multiple. At the top of the list are Brazil’s all-time low interest rates, which have created the double benefit of a booming mortgage market and buoyant construction section. Brazil’s agricultural industry comes a close second with the “tech-savvy farmers” responsible for ensuring that Brazil is one of the world’s largest exporters of food. Brazil’s thriving capital markets and a banking sector that has “emerged unharmed from the global crisis” are two other driving forces behind Brazil’s excellent economic results.
According to the FT, Brazil’s optimism is also a contributing factor – “such is the new sense of optimism that the services sector avoided recession even at the height of the global crisis”, the report comments. President Lula has had his part to play too. The FT cites his “personal charm and popular appeal” as essential elements in Brazil’s success.
As IDEAglobal, a New York research firm, points out in the report, “Brazil has been a great story”. Part of Brazil’s great story is the US$15.9 billion in foreign direct investment ploughed into the country in the first eight months of this year. Another chapter of the story is the Bovespa, Brazil’s stock exchange, now the world’s fourth largest in terms of market capitalisation. And then there are the massive oil reserves, which the FT refers to as “sunken treasure” and the “ticket to the world’s VIP energy club”.
Brazil real estate also comes under the spotlight in the FT report, particularly in its coverage of the ‘Minha Casa, Minha Vida’ (My House, My Life) project. With a budget of R$60 billion, the project is well underway with the subsequent boom in the construction sector as Brazil starts to reduce its housing shortage (according to the FT, the shortfall runs to more than 7 million properties).
The long list of Brazil’s achievements speaks for itself and there is undoubtedly a bright future ahead, both for Brazilians and foreigners with investment in Brazil. As the manager of Credit Suisse in Brazil says in the lead article in the report, “it is very difficult not to be bullish about Brazil”.
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