Trading Stocks and Buying Bonds in Brazil

I recently made a project at my university regarding high yield corporate bonds and discovered that Brazil has the highest real interest rate in the world. Being curious I decided to look further into the Brazilian Stocks and Bonds Market.

When I learned about Brazil in the past I often thought of high inflation, an economy in recession and a weak financial environment. After rating company Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were imens. However in the last decade things have dramatically changed and today Brazil is the continent’s strongest 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 trade stocks, fonds and derivatives while the BM&F trades currency futures. Both exchanges have been merged a few months ago into BM&FBOVESPA.

The spectrum of investments is multifaceted 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 Brazilian representative to be the responsible for my investments. As far as taxes are concerned foreign investors are tax-exempted unless they are resident in tax-free country.

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