Foreign investors may be forgiven for turning their capital away from Brazil: the country’s macroeconomic data continues to disappoint, with gross domestic product (GDP) growing by only 1% last year and by a forecasted 2.4% this year. On top of this, the BM&F Bovespa stock exchange dropped nearly 30% in the first half of 2013; and the exchange rate against the US dollar has dropped by about 20% since the beginning of the year. At the same time, international investors are being distracted by the growing appeal of other Latin American economies, such as Mexico and Colombia, whose economies and capital markets are developing rapidly.
“This particular period of time is one in which not many international players are looking at Brazil,” says Gustavo Franco, former president of Brazil’s central bank and the founder of Rio Bravo, a Rio de Janeiro-based investment firm that has 11bn reais ($4.9bn) in assets under management. “Only the contrarians are looking at Brazil or those that had been thinking of [investing] in the country for some time, but only now see an opportunity because of lower prices.”
