Brazilian property better protected from global recession than other emerging markets?
Date added: 31st January, 2011 at 13:09
(view all articles from January, 2011)
Categories: Economy, Property News
Investment in Brazilian property may offer greater protection against the potential for another global financial downturn than speculation in other emerging markets, as one expert has explained Latin America is less vulnerable to worldwide recession.
An article on MarketWatch recently offered advice to those hoping to profit from the growth of developing economies.
Speaking to the news provider, practice leader of Frontier Strategy Group's Quantitative Analytics Matt Lasov explained why countries like Brazil could present a good opportunity for investors.
“Latin American markets are ... more insulated than many Asian markets from another downturn in the developed world because they do not rely as heavily on exports,” he said.
Another reason for Brazil's attractiveness to speculators is the increasing wealth of the country's people, propelled by a young population seeing higher salaries and increasingly entering the middle class.
According to figures from Frontier Strategy Group MarketView and the Economist Intelligence Unit, personal disposable income in Latin America rose from $3,404 (£2,146.69) per capita in 2000 to $5,739 per capita in 2010.
Emerging market fund manager for Swiss bank Vontobel Rajiv Jain noted how consumers in such countries were beginning to take on spending patterns similar to those in the developed world, telling Reuters tobacco firms, brewers and casinos were performing well as a result.
He noted Souza Cruz, a Brazilian tobacco company, made stronger profits when inflation was high. The expert explained this shows the firm has "pricing power". "They are not only a defensive; they are growing," he stated.
Elsewhere, head of global emerging markets at Aberdeen Asset Management Devan Kaloo told the Independent the expansion of young populations was also supporting banks and retailers.
Mr Lasov told MarketWatch the appreciation of developing economies' currencies versus their major counterparts may support domestic spending.
"As emerging markets' currencies increase against the [US] dollar, euro and also the renminbi, emerging markets' consumers will have more purchasing power for imported goods," he explained, predicting that consumption would grow more quickly in developing markets than their wealthier peers.
Brazil has recovered well from the global financial crisis. An article in the Independent explained the discipline of banks in Latin American countries and their firm financial systems had helped them battle the downturn effectively. Head of Asia Pacific investment strategy with Mirae Asset Global Investments Wilfred Sit told MarketWatch consumer spending in developing markets, although hit in the short-term by the recession, has been enjoying a rapid recovery for the last two years.
For anyone wishing to invest in the full potential of Brazil, Property Bond Brazil has an excellent array of Brazilian property. 
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