Trading Stocks and Buying Bonds in Brazil

Last week I have made a project at my university regarding high yield corporate bonds and found out that the Brazilian economy has the highest real interest rate of the world. Being curious I decided to research further into the Brazilian Stocks and Bonds Exchanges.

When I heard about Brazil in the past I always thought of a devaluate currency, and a weak financial environment. After rating agency Moody’s downgraded the Brazil to BB- in 1989 the consequences were imens. However in the last ten years the situation has dramatically changed and nowadays Brazil is Latin America’s most stable economy and on its way to become 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 most important Brazilian Stock Exchange Bovespa investors can buy, sell and rent stocks, fonds and derivatives while the BM&F trades interest futures. Both exchanges have been merged some months ago into BM&FBOVESPA.

The spectrum of investment products is manifold 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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