Safe Haven For Brazilian Investment

Foreign funds, particularly dollars, have been pouring into Brazil this year. The record influx indicates that investment in Brazil is seen as a safe haven for funds.

Brazilian investment ranked fifth in the world in 2010 for foreign direct investment (FDI). Amounts this year appear to be increasing on 2010. Flows of FDI into Brazil during the first six months of this year were the highest since 1947 when the Brazilian Central Bank records began.

Foreign investment in Brazil from January to June totalled US$32.5 billion, 67% of the total FDI in 2010. The business magazine Istoe Dinheiro attributes the rise in foreign funds to the forthcoming World Cup and Olympics plus big investment in Brazil’s oil and gas industries.

Investment Oasis

Against a background of global economic uncertainty, investment in Brazil is seen as an opportunity. Istoe Dinheiro calls Brazil “an oasis in the midst of the global drought”, a perception shared by many foreign investors, particularly because Brazil represents such good investment potential across a wide range of options.

These options encompass equity, commodities, agriculture and real estate in Brazil offering timescales for every portfolio. Funds for short-term investments are attracted to Brazil because of the profits to be made on high interest rates. Long-term investments find appeal in Brazil’s expanding consumer market.

Brazilian investment is also perceived as a safe haven from doubts over US debt and the second Greek bail out. The buoyant Brazilian domestic market with its fast-growing middle classes is a magnet for consumer-orientated investment and Brazil’s strategic position in Latin America brings many other emerging markets such as Chile, Colombia and Peru within easy reach.

Brazilian Investment Abroad

Parallel to the huge influx of FDI into Brazil is Brazilian investment abroad, also experiencing record levels. Central Bank statistics reveal a massive increase this year – from January to July, Brazilians invested US10.53 billion outside Brazil, 91% of the 2010 total. Total Brazilian assets abroad are expected to reach US$300 billion by the end of this year.

Most Brazilian investment outside Brazil is direct participation in foreign companies, followed by equity and portfolio investment. Perhaps surprisingly given the booming Brazilian property market is the size of real estate investment by Brazilians abroad. The largest group of foreign buyers of real estate in Miami are Brazilians who are buying 9% of property there.

For international investment experts, the latest FDI figures for Brazil are indicative of the country’s consolidation as an investment destination. Against a background of global economic insecurity, many analysts expect to see further investment in Brazil and other solid emerging markets. The phenomenon of bigger Brazilian investment abroad is seen as a sign of greater Brazilian wealth and of Brazil’s increasingly important international presence.

About Obelisk International: Obelisk International offers select investment opportunities in Brazil in a range of sectors such as residential real estate, construction and social housing. Obelisk gives investors security, profitability and diversity thanks to a combination of close attention to our clients’ investment requirements and high quality in-house research and analysis.

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