A few days ago I have made a study regarding high yield 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 Market.

When I learned of Brazil in the past I always thought of high inflation, a struggling economy and an instable financial market. After rating company Moody’s downgraded the Brazil to BB- in 1989 the consequences were far-reaching. However in the last decade the situation has dramatically changed and today Brazil is the continent’s most important economy and on its way to become one of the most important economies in the world. The Brazilian currency Real is the most valuated compared to 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 trade stocks, fonds and derivatives while the BM&F trades currency futures. Both exchanges have been merged a few months ago into BM&FBOVESPA.

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

As a non-Brazilian investor I can basically make the same investments as a local investor, however I must appoint a Brazilian representative to be the responsible for my actions. As far as taxation is concerned foreign investors are exempted from tax unless they are resident in a tax haven.