Brazil’s equity markets entered 2011 with great expectations thanks to the country’s strong economic prospects. However, by the end of the year the tone was much more muted, due to lowered economic forecasts and the destabilising effects of the eurozone crisis on capital markets around the world. No listings were brought to Brazil’s stock exchange, BM&FBovespa, after July, the last one being Abril Educacao’s $238m initial public offering (IPO), while follow-on placings quietened down towards the end of the year. Only 32 transactions took place in Brazil in 2011, including 11 IPOs, down from a total of 42 transactions and 12 IPOs in 2010, according to data provider Dealogic.
But despite mounting troubles in Europe, the Brazilian equity market is expected to fare well this year, driven by specific economic sectors and, more generally, by macroeconomic policies expected to focus on boosting gross domestic product (GDP), rather than on containing inflation. Further, companies based in the fastest-growing areas of Brazil may be in a position to enter the equity capital markets soon, according to some analysts. Brazil's north-eastern region has recently been growing at a much faster rate than the country’s average, with the capital of the Pernambuco region, Recife, experiencing double the average GDP growth rate of the rest of the country.
