Trading Stocks and Buying Bonds in Brazil
A few days ago I have made a research about high yield bonds and discovered that Brazil 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 learned about Brazil before I often thought of a devaluate currency, a struggling economy and a weak financial market. After rating company Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were disastrous. But in the last ten years things have dramatically changed and nowadays Brazil is Latin America’s strongest economy and on its way to become one of the most influent economies in the world. The Brazilian currency Real is the most valuated compared to the dollar for three consecutive years 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 interest futures. The exchanges have been merged some 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 a foreign investor I can basically do 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 tax-free country.