Trading Stocks and Buying Bonds in Brazil

Last week I have made a research about 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 Stock and Bonds Market in Brazil Market.

When I learned of Brazil in the past I often thought of a devaluate currency, a struggling economy and an instable financial environment. After rating company Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were imens. But in the last decade things have dramatically changed and nowadays Brazil is the continent’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 strongest currency compared to the dollar for three years in a row and the Brazilian Stock Market rallied in 2009 almost 90%.

On the biggest Brazilian Stock Exchange Bovespa investors can buy, sell and rent stocks, fonds and derivatives while the BM&F trades lifestock futures. The exchanges have been merged some months ago into BM&FBOVESPA.

The spectrum of investments 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 local representative in Brazil to be the responsible for my accounting. As far as taxation is concerned foreign investors are exempted from tax unless they are living in a tax haven.