Brazil takes to New York for investor day

Many will recall the moment when Warren Buffet, arguably the most famous investor in the world, revealed that the mystery currency he had been stockpiling was the Brazilian real. The Sage of Omaha made millions of dollars buying up reals and exploiting global currency volatility during the financial crisis.

‘In the last five years, the Brazilian real has doubled in value against the US dollar, and the more interesting point is that during much of that time, the Brazilian government, in effect, has been supporting the US dollar,’ Buffet disclosed in an interview. ‘Nobody would have believed 10 or 20 years ago that Brazilians would be supporting the US dollar.’

And yet this is the new dynamic in which the Americas finds itself: a weakening US dollar coupled with a resilient real. Brazil’s currency recently surged to its strongest level in more than two years, climbing to $1.68.

It was in this context that Brazilian companies met with analysts, portfolio managers, research directors, investors and fund managers for the fifth Brazil Day on October 19 at the Bloomberg Building in New York. The event is hosted every two years by IBRI, the Brazilian IR institute, ABRASCA, Brazil’s association of listed companies, the investment professionals body APIMEC, and the national stock exchange BM&FBovespa. The aim of the biennial event is to help showcase the Brazilian capital markets to US investors while discussing topical issues facing Brazilian companies and their investors.

A grand day out
Lucy Sousa, president of APIMEC, Antonio Castro, president of ABRASCA, Domingos Figueiredo de Abreu, vice president of IBRI, and Alexandre Rodrigues Fernandes, manager of business development of BM&FBovespa, made the opening address along with José Scheinkman, professor of economics at Princeton University, who made a presentation on the Brazilian economy.

‘It is always an opportunity to showcase Brazilian companies. Brazil has definitely entered a growth path and the crisis has helped promote this, since Brazil came out reasonably well,’ noted Figueiredo de Abreu. ‘Now we find that more and more investors are seeking this kind of investment. Brazil has became a place to invest.’

Given Brazil’s pure economic growth story, the country’s regulators have been working to ensure investors are protected. Sousa stressed the importance of self-regulation in her speech and explained that since October 1, the CVM (Brazil’s securities commission) had delegated to APIMEC the authority to supervise analysts’ activity. 

‘Over the medium and long term, analysts are concerned with the sustained growth of companies and the ability to compare Brazilian companies with their international peers in order to make them an investment option in the global markets,’ she said.

‘The last Brazil Day was swiftly followed by the international financial crisis of 2008,’ noted Castro. ‘On the positive side we can say that, after two years, the regulatory and self-regulatory institutions have worked very well.’

Fernandes is making investment in technology a priority. ‘This has been a major pillar of the stock market: technology,’ he said, adding that Bovespa is planning to increase the number of individual investors in Brazil. The bourse intends to reach the milestone of 5 mn individual investors by 2014, by investing in financial education and technology.

The fifth Brazil Day was sponsored by Banco Bradesco de Investimento, Eletrobras, JPMorgan and PricewaterhouseCoopers. Ronnie Nogueira is publisher of Revista RI, the Brazilian IR magazine.