Trading Stocks and Buying Bonds in Brazil

A few days ago I have made a project at my university about high yield corporate bonds and discovered 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 of Brazil before I often thought of a devaluate currency, an economy in recession and a weak financial market. After rating agency Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were imens. But in the last decade the situation has dramatically changed and nowadays Brazil is the continent’s most important economy and is becoming one of the most important 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 biggest 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 a few months ago into BM&FBOVESPA.

The spectrum of invest vehicles is manifold and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).

As an investor from oversea I can basically apply the same investments as a local investor, however I must appoint a local representative in Brazil to be the responsible for my accounting. As far as taxation is concerned foreign investors are exempted from tax unless they are resident in an offshore jurisdiction.

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