I had written on this very blog about what I learned on the Brazil Banking and why Marcos must help me find a job in Brazil(preferably near copacabana).
This is known as a Fundmanagers "parody" having a brilliant Idea but no money to invest on, yours truly obviously is in this category now :( ! however I thought I must discuss this EM market story. Tom had raised a very valid 'Fixed income view' on Govie Bra'(Read Brazilian Government Bonds) in his post.To which I had commented on the 'EM' story - of Brazil,Russia & Asian markets. I am now sticking my head out on Brazil and these are the reasons.
Economic Growth
Brazil’s $1.6 trillion GDP already ranks it as the ninth-largest economy in the world. And many believe its continued growth will lead it to surpass both Britain and France by 2012 to become the fifth-largest economy in the world!
Political Stability
Brazil’s President Lula was democratically elected, remains very popular and respects the term-limit restrictions. And while Brazilian corporate governance still lags that of the United States, significant strides have been made to attract and keep private investor capital.
Financial Strength
Brazil 'still' carries an investment grade credit rating and has roughly $240 billion in international reserves — made possible by its vast resources and new level of financial stability. On the financial front, it’s in fact stronger than many of its Latin American counterparts.
wtf, only few years back the IMF attached stringent conditions to the money it loaned to Brazil. Now, in a decisive about-face, the Brazilian government recently announced it will lend $10 billion to the IMF to help improve developing country access to capital!
Energy Independence(I think this is the killer ADVANTAGE)
Over 45% of Brazil’s energy comes from renewable sources — nearly ten times the average use of renewable energy among developed countries. And while it’s known for its abundant hydroelectric power (with more than 600 dams), bio-energy from ethanol has become the nation’s second largest energy source.
Plus, due to recent oil discoveries, Brazil is now believed to hold the world’s eighth largest conventional oil reserves!
In words of my marketing prof 'PLACE PLACE PLACE' - Location, Location, Location
Geographically speaking, Brazil is the fifth-largest country in the world — after Russia, Canada, China and the United States — with a total area of 3,286,488 square miles. But it’s not just the sheer amount of real estate it covers that’s important.
Brazil has 23% of the world’s arable land and at least 40% of it is unused. That’s more than all the farmland in the U.S. combined! And its abundant rainfall and tropical location allows for multiple planting seasons with high yields.
It’s also a leading producer of more than two dozen minerals — including diamonds and gold — as well as the world’s biggest exporter of beef, coffee, orange juice, sugar and chicken!
Population Growth and Urbanization
Brazil is the fifth most populated country in the world with 186 million inhabitants. And many of its residents are now migrating to central urban cities in search of employment, education and higher standards of living.
Meanwhile, higher incomes are fueling higher personal spending, leading to the emergence of a strong middle class. Consequently, demand for consumer goods, cars, and roads is skyrocketing add to this an extremely favourable demographic dividend.
A Well-Capitalized, Growing Banking System which if structured well has potential for triple digit growths.( is there something like double or triple underline , then do that to the point stated here)
Unlike banks in the United States, Brazilian banks are not weighed down by toxic assets, have no major mortgage lending problems and are well-capitalized at over 165% of the international banking standards.
And unlike the Unites States and other developed countries, Brazilians are under-banked and still under-utilize credit cards — pointing to enormous growth potential as Brazil’s middle class emerges into the 21st century.
So any one who wants to join me at copacabana for the New Year eve 2011?
V
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My friend, Brazil is - finally - in good shape, but be careful of over optimism. We still have serious problems:
ReplyDelete- It is increasingly hard to start the infrastructure projects, as a result, for instance, of endless discussion about environmental damages. It is the case, for instance, of the new very big hidroplants we need to build in the amazon.
- The tax system is very inefficient, our VAT is insane, for instance, and it is really hard to change it, since some states are going to lose money.
- The government is increasing current expending (salaries of public sector, for instance) and that is an expense that is almost impossible to reduce later.
- Our educational system is crap. Publics schools are really bad, although improving.
In summary, be optimistic, but be aware that we still have a lot of problems to solve.