Posted by Rachel
This week, the Wall Street Journal reported that the Brazilian government has now imposed a two percent tax on foreign investment entering Brazil, hurting the local stock markets.
Brazil has weathered the global economic crisis much better than other countries, and the Ibovespa index rose 70% since March. The government has imposed tax on stock market purchases before, at 1.5% in 2008. The move this October is due to the strong real, which is hurting Brazilian exports.
However, experts say the move is already been detrimental to Brazilian stock markets and small and medium-sized companies looking to get onto the market in Brazil. They also say the move could threaten Brazil’s relatively new investment-grade status.
But like things in Brazil sometimes go, it seems investors may have already discovered a jeitinho to get around the tax. Investors looking to buy equities in Brazil could buy the equivalent stock in New York, cancel the purchase, and as a result get the equivalent Brazilian stock.
To read more, see the WSJ article here.
Posted by Rachel
This week, the Wall Street Journal revealed that the U.S. government plans to invest US$2 billion in Petrobras, Brazil’s state-run oil company. It is the largest company headquartered in the Southern Hemisphere and the largest company in Latin America in terms of revenue. Its assets, which include oil assets in Brazil and 18 other countries, amounts to $133.5 billion.
The investment, which is in fact a loan, is to help Petrobras explore the Tupi basin off the coast of Rio de Janeiro, which could potentially make Brazil one of the world’s biggest oil powers. The investment will go towards offshore drilling activities to take place over the next several years.
According to the article, a preliminary commitment of $2 billion is on the table, though that amount may increase. However, some experts are scratching their heads about the idea of a loan from the ailing U.S. Treasury to cash-rich Petrobras.
Also this week, the New York Times reported that the Brazilian government is seeking more control over Petrobras in an effort to prevent foreign influence and to ensure national control over the Tupi oil field. However, the reform plan, which is being promoted by President Lula, faces strong opposition in Congress.
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