Foreigners Cash Out US$ 1.8 Bi, But Brazil Bets They’ll Buy US$ 26 Bi in Stocks

Brazilian stock exchange Bovespa Brazil reached last year a record US$ 34.6 billion (almost double the US$ 18.7 billion of 2006) in Foreign Direct Investment (FDI), reported the Brazilian Central Bank. FDI this year is expected to topple US$ 28 billion with an estimated record 4.5 billion in January.

Another area which in 2007 attracted record foreign capital was fixed rate bonds and the stock exchange, totaling US$ 39.7 billion compared to US$ 14.68 billion in 2006, with an all time record of US$ 8.7 billion last December, said Altamir Lopes, head of the Economics Department of the Central Bank.

However Lopes admitted that world financial turbulence has resulted in a net loss of US$ 1.8 billion in the local shares and bonds markets during January.

"Global financial and credit market turmoil has prompted investors to cash out of short-term investments that aren't directly related to the economy's future prospects, leading to an outflow of US$ 1.8 billion from Brazilian stocks and fixed-rate bonds so far this month," said Lopes.

For this year the Central Bank estimates an inflow of US$ 26 billion into the shares and bonds.

"In spite of the current volatility we observe a continued inflow of funds that hinge on confidence, economic fundamentals and the prospects of the Brazilian economy are going well. The outflow is a pattern common to all stock exchanges round the world."

Brazil ended 2007 with a positive current account of US$ 3.6 billion (0.27% of GDP, below the US$ 13.6 billion of 2006) given a significant reduction in the country's trade surplus and an increase in profits sent overseas.

Foreign investment has accelerated in Brazil as the central bank has built up credibility by beating its inflation target for two straight years at the same time that Latin America's biggest economy is expanding at the fastest pace since 2004.

The central bank's inflation target was first adopted in 1999. The bank now targets inflation of 4.5%, plus or minus 2 percentage points to account for unexpected price shocks.

Mercopress

Tags:

Ads

You May Also Like

Brazil's 7th Free Software Forum

Brazil Becomes World’s Free Software Center for Three Days

One of the main global meetings about freeware computer programs begins today, April 12, ...

Two-Thirds of Brazil’s 32 Million Youths Are Poor Who Need More than Food

Brazil government’s policies for young people, concentrated on the war against poverty and hunger, ...

Brazil Shows in Algiers How Beef Is Prepared the Muslim Way

Brazilian cattle beef is going to be promoted in Algeria at the beginning of ...

Brazil Adopts Convention Against Corruption, But Needs to Change Laws

The United Nations (UN) Convention Against Corruption enters into force on December 14th and ...

Daily Doses of Foreign Cash Keep Brazil’s Comatose Varig Alive

VarigLog made another deposit yesterday, July 3, to keep bankrupt Brazilian airline Varig operating ...

Brazil: Indians Celebrate Supreme’s Ruling on Land, But Farmers Vow to Fight

Across Brazil Indians are celebrating a resolution by the Brazilian Supreme Court, where the ...

Bunge Foods Invests Over US$ 1 Billion in New Plants in Brazil

Brazilian food manufacturing company Bunge Alimentos has just inaugurated a soy processing factory in ...

Brazil Confirms It Grew 7.5% in 2010

Brazil’s statistical bureau (IBGE) announced today that Brazilian GDP growth in 2010 was 7.5%, ...

Industry Grows 4.4% in Brazil in February

Eleven of the 14 Brazilian regions researched by the Brazilian Institute of Geography and ...

Brazil and US: The Black-White Divide

When Americans are confronted with the existence of differential treatment of Brazilians by color, ...