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Trading Stocks and Buying Bonds in Brazil

A few days ago 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 look further into the Brazilian Stocks and Bonds Exchanges.

When I learned of Brazil before I often thought of high inflation, and a weak financial market. After rating agency Moody’s downgraded the Brazilian economy to BB- in 1989 the consequences were disastrous. However in the last ten years the situation has dramatically changed and nowadays Brazil is the continent’s most stable economy and is becoming one of the most influent economies in the world. The Brazilian currency Real is the strongest currency against the dollar for three years in a row and the Brazilian Stock Market rallied in 2009 almost 90%.

On the most important Brazilian Stock Exchange Bovespa investors can buy, sell and rent stocks, fonds and derivatives while the BM&F trades currency futures. The exchanges have been merged recently into BM&FBOVESPA.

The spectrum of investment products is broad and very well and closely regulated by the CVM (Comissao de Valores Mobiliarios).

As an investor from oversea I can basically apply the same investments as a local investor, however I must appoint a Brazilian representative to be the responsible for my accounting. As far as taxes are concerned foreign investors are exempted from tax unless they are resident in tax-free country.

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