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Investment in Brazil 'best opportunity in Latin America'

Date added: 21st June, 2010 at 14:12
(view all articles from June, 2010)

Categories: Economy

Investment in Brazil is the best opportunity for speculators looking to buy assets in Latin America, one commentator has said.

Writing for the Scotsman, Charles Robertson has said that with investors becoming cautious due to the financial crisis in the eurozone, global equity markets have been unstable recently, but this has lifted the potential gains of buying into Brazil.

According to Mr Robertson, the country could offer a strong performance, as it is likely to be particularly well supported by global economic growth.

Rich in natural resources such as gold, zinc, copper, oil and iron, its financial health is also benefiting from an increasingly strong domestic market driven by consumerism, which stems from the rising wealth of the nation.

Public and external debt is low compared with the eurozone countries, while reserves of foreign exchange have expanded significantly - providing a buffer should the economy sustain any damage from overseas affairs, he noted.

In addition, banks are stronger than many of their western counterparts, while tight fiscal policies have seen an expansion in personal incomes over the past decade, the journalist stated.

Not weighed down with the same financial problems as more developed countries, investment in Brazil may be a good alternative to speculators looking to avoid the risk of eurozone nations as much as possible and capitalise on the country's advancement, he went on.

With a global economic recovery expected, Mr Robertson explained, Brazil is continuing to grow from exports of natural resources, capitalising on an expansion in demand.

Meanwhile, increased spending power is driving domestic markets, with JP Morgan encouraging investors to buy into the consumption trends that are changing with sociological shifts, such as the higher standards of life, urbanisation and salary increases the country is currently enjoying.

The asset management firm is just one of the investors that have taken an interest in the nation, with Mr Robertson citing UK-based companies such as Threadneedle Asset Management, Invesco Perpetual and Blackrock.

JP Morgan announced in April that its Brazil Investment Trust had attracted £46.7 million shortly after its launch, with £18.6 million originating from retail speculators and the remainder from institutional accounts.

Invesco Perpetual, the commentator noted, has bought into the region since November 1994. It has more than £380 million in assets in its fund and has given a strong performance over the last 12 months.

Meanwhile, Mr Robertson continued, Threadneedle Asset Management, which has invested in Brazil since 1997, has the largest fund, with assets of over £1 billion, supported by firm results over the past year. ADNFCR-1477-ID-19848870-ADNFCR