MercoPress. South Atlantic News Agency

Brazil’ stock exchange reaches new high; 62% gain so far in 2009

Money is pouring back to Brazil’s Ibovespa and emerging markets

Brazilian blue-chip shares closed on Friday at a 14-month high as global investors continue to flock to the country. The benchmark Ibovespa stocks index closed 0.8% higher at 60,703 points, up from Thursday's close at 60,236 points and breaking through the psychologically important 60,500-point mark.

That was also the index's best close since July 2008, topping the previous 14-month high of 60,410 points reached Wednesday. The recent rally in Brazil has pushed the Ibovespa to gains of 7.5% so far in September, while the index is up a stunning 62% in 2009. Trading volume ended strong at 5.72 billion Brazilian Reais equivalent to 3.17 billion USD.

Foreign investment funds have piled into Brazil in recent days on expectations that Moody's Investors Service will give Brazil an investment grade sovereign debt rating, joining Standard & Poor's and Fitch Ratings, said Pedro Galdi, an investment analyst at Sao Paulo-based SLW Corretora.

“Finance Minister Guido Mantega was speculating on this earlier in the month, and at that time we had net outflows” Galdi said. “But now the money is coming back in and I'm thinking one of the reason's why Brazilian stocks haven't seen any significant profit-taking is because investors are expecting a change from Moody's”.

The celebration, however, will likely be short-lived, Galdi added. “When that happens, they will sell on the news,” the analyst said.

Foreign direct investment in Brazil totalled 1.29 billion USD in July, for a total of about 14 billion so far this year, according to the most recent data from the country’s central bank. The bank expects investment to reach 25 billion in 2009.

Meantime the Real has gained 28% against the US dollar in 2009, only second to the performance of the South Africa’s rand. Brazil’s Real was up 2% in the past month, compared with a 4.9% gain for the Australian dollar and an 8% advance for the rand.