Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
AI Stocks Portfolio and Tesla - 23rd May 24
All That Glitters Isn't Gold: Silver Has Outperformed Gold During This Gold Bull Run - 23rd May 24
Gold and Silver Expose Stock Market’s Phony Gains - 23rd May 24
S&P 500 Cyclical Relative Performance: Stocks Nearing Fully Valued - 23rd May 24
Nvidia NVDA Stock Earnings Rumble After Hours - 22nd May 24
Stock Market Trend Forecasts for 2024 and 2025 - 21st May 24
Silver Price Forecast: Trumpeting the Jubilee | Sovereign Debt Defaults - 21st May 24
Bitcoin Bull Market Bubble MANIA Rug Pulls 2024! - 19th May 24
Important Economic And Geopolitical Questions And Their Answers! - 19th May 24
Pakistan UN Ambassador Grows Some Balls Accuses Israel of Being Like Nazi Germany - 19th May 24
Could We See $27,000 Gold? - 19th May 24
Gold Mining Stocks Fundamentals - 19th May 24
The Gold and Silver Ship Will Set Sail! - 19th May 24
Micro Strategy Bubble Mania - 10th May 24
Biden's Bureau of Labor Statistics is Cooking Jobs Reports - 10th May 24
Bitcoin Price Swings Analysis - 9th May 24
Could Chinese Gold Be the Straw That Breaks the Dollar's Back? - 9th May 24
The Federal Reserve Is Broke! - 9th May 24
The Elliott Wave Crash Course - 9th May 24
Psychologically Prepared for Bitcoin Bull Market Bubble MANIA Rug Pull Corrections 2024 - 8th May 24
Why You Should Pay Attention to This Time-Tested Stock Market Indicator Now - 8th May 24
Copper: The India Factor - 8th May 24
Gold 2008 and 2022 All Over Again? Stocks, USDX - 8th May 24
Holocaust Survivor States Israel is Like Nazi Germany, The Fourth Reich - 8th May 24
Fourth Reich Invades Rafah Concentration Camp To Kill Palestinian Children - 8th May 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Brazil Stock Market Looks Like A Buying Opportunity Again

Stock-Markets / Brazil Jan 14, 2012 - 07:06 AM GMT

By: Sy_Harding

Stock-Markets

Best Financial Markets Analysis ArticleBrazil continues to impress as a country and economy, due in no small way to its government’s multi-year efforts and determination to make it an important global presence.

Brazil is the fifth largest country in the world by geographical area and population (190 million), and now has the sixth largest economy, having surpassed the United Kingdom last year.


It’s long been known for its dirt-poor city slums, which are appalling. But its booming economy of recent years has increased the purchasing power of its population and moved an estimated 20 million out of poverty, with the majority of the population now in the middle class for the first time ever.

The increasing purchasing power of its population, and pent-up demand for goods, is an important factor in its solid economy and relative protection from the woes of the world.

The country is blessed with an abundance of natural resources, including huge and growing reserves of oil and gas, is the world’s largest producer of sugarcane, coffee, and tropical fruit, and has the largest commercial cattle herd.

Yet exports account for only 14% of its economy, which should leave it less affected by threatening economic slowdowns in Asia and Europe.

Manufacturing, including automobiles, steel, petrochemicals, computers, aircraft and consumer durables, account for 31% of GDP. Agriculture, construction, and services, including healthcare, banking, insurance, retailing, etc., account for the rest.

Over the years Brazil’s government has undertaken several timely measures that are probably the envy of many global central banks. Among them, the Brazilian government strived to pay off debts before the credit crisis hit.

Although its stock market plunged with the rest of the world in 2008, Brazil’s economy experienced solid performance during the global financial crisis and a strong and early recovery. The result was that in 2010, while Europe and the U.S. were just beginning to anemically recover from the ‘Great Recession’, Brazil’s economy was already over-heated, humming along at 7.5% growth. Taking quick action, Brazil’s government began aggressive measures, including raising interest rates, to slow the growth to a more sustainable level, and did so, with economists expecting its GDP growth slowed to 3% or so in 2011.

Now with global concerns about a possible recession in Europe that might spread out into Asia and even the U.S., the government of Brazil, unlike those of Europe and the U.S. where interest rates are already at record lows, is in a position of being able to cut interest rates and loosen policies to further stimulate its economy.

It began those policy reversals in August, and Brazil’s economy is forecast to continue to grow at roughly a 3% rate this year and in 2013.

Meanwhile, Brazil’s stock market plunged into another bear market in 2010 when its government began those tightening measures to slow its over-heated economy. The Bovespa Index declined 45% to its early October low. It began rallying strongly off that low, triggering a buy signal on our momentum reversal indicators, and we believe Brazil’s economic growth prospects support the buy signal. Brazil should be in a better position to continue its long-term economic growth than most other countries, and is not likely to be affected as much by the eurozone debt crisis, or a possible recession in Europe, which would be a larger problem for countries with economies more dependent on exports.

The International Monetary Fund estimates that Brazil, having passed the United Kingdom last year to become the world’s sixth largest economy, will next pass France, the world’s fifth largest economy, by 2015. It could happen even sooner.

We believe Brazil is again presenting a buying opportunity, and we like the iShares Brazil ETF, symbol EWZ.    

In the interest of full disclosure, I and my subscribers already have positions in EWZ.

Sy Harding is president of Asset Management Research Corp., and editor of the free market blog Street Smart Post.

© 2012 Copyright Sy Harding- All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in