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Foreigners Haven’t Bought Brazilian Shares Like That in 62 Years

October 26th, 2009

ipoInvestment from overseas in shares negotiated in Brazil reached US$ 8.761 billion this month up to last Friday, October 23, according to the Central Bank (BC). This value, still preliminary, is the highest in comparison with any month since 1947. In September this year, the inflow totaled US$ 3.987 billion.

According to the head of the Economic Department at the BC, Altamir Lopes, there was expressive concentration on Initial Public Offerings (IPOs). Early this month, Santander Brazil bank promoted its IPO.

The volume of foreign funds in total share trade, including shares sold domestically and on foreign stock exchanges, is also record. Preliminary figures show that the value was US$ 13.025 billion.

Investment in fixed income in the country this month is US$ 1.580 billion, up to last week. Last month the total had been US$ 2.872 billion.

According to Lopes, the figures calculated to date have not yet been influenced by the government’s decision of levying a 2% Tax on Financial Operations (IOF) on foreign funds coming into fixed income funds on the stock markets. “We are going to wait. It is too soon to make an evaluation,” said Lopes.

According to him, the greater investment in shares is due to the more positive outlook regarding the economy of Brazil. “Expectations regarding the economy are completely different from one year ago. The Brazilian stock market has shown itself highly attractive and it would not be different with regard to foreign capital.”

Lopes added that the balance of payments (commercial and financial transactions between Brazil and abroad) “shows very positive signs, both in the capital markets and in direct investment [flowing into the productive sector]”. “We are going to continue with expressive direct investment,” he said.

In September, foreign direct investment totaled US$ 1.816 billion. This month, up to November 23, foreign direct investment totals US$ 1.3 billion. Expectations by Brazil for the month of October total US$ 1.7 billion.

To Lopes, the result for last month was only not better due to an unexpected operation. A company in the beverage sector bought shares from its controller abroad for the value of US$ 1 billion.

“This is an operation between head office and subsidiary, but in the methodology it is accounted for as a return of direct investment,” said Lopes.


Written by Kelly Oliveira

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