Brazil's Stocks Leaving Dow Jones in the Dust
Martin Weiss, Ph.D. examines the Brazilian marketplace and the factors driving the economy, allowing the Bovespa to leave the Dow Jones far behind. In this issue of Money and Markets, Dr. Weiss discusses several indications that the Brazilian economy is going to continue on its upward path.
Jupiter, Fla. (PRWEB) May 10, 2007 -- Martin Weiss, Ph.D. examines the Brazilian marketplace and the factors driving the economy, allowing the Bovespa to leave the Dow Jones far behind. He discusses several indications that the Brazilian economy is going to continue on its upward path.
According to Dr. Weiss, Brazil is shifting into high gear. Just recently, its currency, the real, hit a six-year high against the dollar. It's also gaining against the euro, the Swiss franc, the British pound, the Japanese yen, and eleven other most actively traded currencies tracked by Bloomberg. This year, it's the strongest major currency in the world.
A pivotal driving force: Brazil's huge and fast-growing trade surplus. Just last week, the surplus expanded to $4.2 billion from a revised $3.36 billion in March. William Landers, a fund manager with $4 billion in stocks at Blackrock, Inc., says Brazil is now "one of the most attractive countries" in the world for investors, with 20 percent earnings growth ahead.
Arthur P. Steinmetz, manager of the best-performing international bond fund in the United States, says Brazil is entering its "golden age." His fund has $6.4 billion in assets. And his biggest single stake is in Brazil, the only emerging market in his portfolio.
Even America's leading credit rating agencies are expected to add their vote of confidence: Don't be surprised if they upgrade Brazil's debt to investment grade. Reason: Before interest payments, Brazil will probably have a budget surplus amounting to 3.8% of GDP this year.
Most important, countless investors are voting with their money. Brazil's leading stock index, Bovespa, just catapulted above the 50,000 mark: Brazil's resource stocks are going through the roof; the Brazil ETF is making all-time highs; and nearly all of Brazil's stocks are leaving the Dow Jones Industrials further behind.
Look at some of the Brazilian stocks highlighted in Money and Markets:
Banco Bradesco, which trades on the New York Stock Exchange with the symbol BBD, is Brazil's largest private bank and has just made new all-time highs.
Companhia Vale do Rio Doce (RIO), the world's second-largest miner, is leading Brazil's natural resource boom.
Gerdau S.A. (GGB), Latin America's largest steelmaker, has just issued a stellar first-quarter report, with earnings before interest, taxes, depreciation and amortization, surging over 17 percent.
Over the past five years, while the Dow is up 33%:
Banco Bradesco is up 437%, or 13 times more than the Dow; Companhia Vale do Rio Doce is up 852%, 25 times more; and Gerdau is up 914%, or over 27 times more.
By investing strictly in EWZ, an exchange traded fund that holds all three of these stocks plus several others, it could still have a gain of 369%, or 11 times the Dow's.
Right now, Brazil has a whopping 260 million acres of land available for cultivation. Plus, it has another 86 million acres that have been used for pastures and could mostly be converted to sugar cane cultivation. So the capacity to produce more ethanol is almost limitless. This leaves the door open for massive expansion of ethanol production and an equally massive infusion of international capital into Brazil's ethanol industry.
Brazil is the world's number one producer and exporter of sugar and the world's largest exporter of ethanol. Last year, Brazilian ethanol makers produced 4.5 billion gallons of ethanol and exported 900 million gallons. In the current sugarcane season, Brazil expects to produce a record 5.34 billion gallons of ethanol, up 13.5 percent from last year's harvest.
"Cars with flex-fuel engines (that run on ethanol or gasoline) are rolling off Brazil's assembly lines en masse. Now, flex-fuel cars have virtually eliminated gas-only engines from the new-vehicle marketplace. The ethanol industry is becoming the dominant player in Brazil's energy marketplace. Resulting in: A reduction in Brazil's crude oil imports, an increase in energy exports, and an even larger trade surplus." explains Dr. Weiss.
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About Dr. Martin Weiss & Money and Markets
Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com. |
