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Thursday, August 26, 2010

Overseas Investment Income

The IRS has done quite a thorough job of catching the income or capital gains from just about every kind of offshore or foreign investment that US residents can get involved in. Taxes are either applied as gains are made, or they are applied when an investment is realised, with taxes being calculated back over the period of the investment and compounded forward to the time of payment.
Some of the key tax collection mechanisms are aimed at Controlled Foreign Corporations, Foreign Personal Holding Companies, Foreign Investment Companies, Passive Foreign Investment Companies, Grantor Trust Provisions and Foreign Trust Reporting Requirements.
Although US citizens may still choose to set up offshore trusts, the rationale will be asset protection rather than tax minimisation. Trusts are caught by the legislation as much as other types of investment structure, and should be considered as tax-neutral at best.
As far as 'passive' income is concerned, international tax planning for US residents is therefore concerned with providing investment structures which are fiscally transparent, so that the gains from higher-yielding international or offshore investments can be taxed in the investor's hands on the same basis as domestic investments. This usually means employing limited partnership or limited liability company structures, which are provided by many offshore jurisdictions, which are usually un-taxed in the offshore jurisdiction, and which are treated as fiscally transparent by the IRS.
Straightforward investments into public offshore investment funds, which may offer superior returns to domestic funds, will be caught by the Passive Foreign Investment Company legislation, and it will often be correct to make a QEF election in order to pay tax year-by-year on the fund's increase in asset value (excluding unrealised capital gains).
Individuals who have significant 'active' business income may be able to make use of offshore corporate tax shelters, although the foreign sales corporation (outlawed by the WTO) has now been abolished.
Under the Bank Secrecy Act 1970, a person who owns or has authority over a foreign financial account, including a bank account, brokerage account, mutual fund, unit trust, or other types of financial accounts, is generally required to report the account yearly to the Internal Revenue Service. Under the Bank Secrecy Act, each United States person must file a Report of Foreign Bank and Financial Accounts (FBAR), if
  • the person has a financial interest in, or signature authority (or other authority that is comparable to signature authority) over one or more accounts in a foreign country, and
  • The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
The IRS has made a number of attempts to uncover what it supposes to be hordes of undisclosed overseas investment accounts. In October, 2009, Commissioner Doug Shulman said that he was pleased with the response to the agency's latest voluntary offshore bank account disclosure scheme, the deadline for which passed on October 15.
According to Shulman, the IRS received some 7,500 applications for the scheme, with disclosures ranging from USD10,000 to as much as USD100m associated with foreign bank accounts in all corners of the globe.
The latest offshore disclosure initiative seems to have been much more successful than a similar scheme administered by the IRS in 2004 known as the Offshore Voluntary Compliance Initiative. Under the 2004 amnesty, only 1,300 individuals came forward and the IRS collected about USD170m in unpaid tax. Shulman, however, has not disclosed how much the 2009 scheme will bring in for the Treasury, but it is certain to be a much higher figure.
The latest amnesty scheme was launched by the agency in March, 2009, and is just one of the many initiatives being used by the Obama administration to ensure that offshore income, both personal and corporate, is taxed in the US. Under the terms of the 2009 scheme, those making a voluntary disclosure about money held overseas face a penalty of 20% of the highest aggregate value of the account on one day in the last six years. The IRS also removed the threat of criminal prosecution. Ordinarily, if a taxpayer is discovered to have undeclared offshore income or assets, they face penalties up to 100% and possible jail time. The original deadline was set for September 23, but the IRS extended the amnesty until October 15 after it received an influx of requests from tax practitioners who themselves have been inundated with enquires about the scheme from their clients. Shulman warned that no further extensions will be granted, and that the agency will be unlikely to run another amnesty program any time soon.
Buoyed by the success of the 2009 amnesty, Shulman has revealed that the IRS is opening more representative offices abroad in places like Panama, China and Australia, and will also increase staffing levels in existing overseas offices, which include Barbados and Hong Kong.
The agency is also to create a dedicated team of enforcement and investigation officers to chase up wealthy individuals with complex, often international-based, financial arrangements, and President Obama’s 2010 budget includes extra resources for the IRS to hire almost 800 additional enforcement personnel.
The Democrat-ruled Congress is playing its part also: in October, 2009, senior Congressional Democrats unveiled legislative proposals that would give the Internal Revenue Service (IRS) new tools to "detect, deter and discourage" the use of foreign bank accounts for the purposes of avoiding US taxes.
The Foreign Account Tax Compliance Act, introduced into both chambers of Congress on October 27, blends proposals included in President Obama’s 2010 budget as well as Senator Carl Levin's 'Stop Tax Haven Abuse Act' and draft legislation published by Senate Finance Committee Max Baucus earlier in the year.
Under the new bill, foreign financial institutions, foreign trusts, and foreign corporations would be forced into providing information about their US account holders, grantors, and owners.
If enacted the Foreign Account Tax Compliance Act would:
  • Impose a 30% withholding tax on payments to foreign financial institutions and other entities unless they acknowledge the existence of offshore accounts to the IRS and disclose relevant information including account ownership, balances and amounts moving in and out of the accounts. 
  • Require individuals and entities to report offshore accounts with values of USD50,000 or more on their tax returns.
  • Extend the statute of limitations to 6 years when offshore accounts are unreported or misreported (the current statute of limitations on tax audits is 3 years).
  • Require advisors who help set up offshore accounts to disclose their activities or pay a penalty.
  • Require electronic filing of information reports about withholding on transfers to foreign accounts to enable the IRS to better match reports to tax returns.
  • Strengthen rules and penalties with regard to foreign trusts, including rules to determine whether distributions from foreign trusts are going to US beneficiaries and reporting requirements on US transfers to foreign trusts.
  • Clarify the definition of outgoing US dividend payments that are received by foreign persons so they cannot be disguised as other types of distributions in an effort to avoid US taxes.
The bill was introduced in the Senate by Baucus and Sen. John Kerry, and in the House of Representatives by Reps. Charles Rangel and Richard Neal.
Baucus commented: “Last March, I circulated a preliminary draft of offshore compliance legislation to obtain stakeholder input to make the proposal even stronger, more durable and more likely to become law. The proposal offered today is the culmination of that effort and represents the best ideas from both the House and the Senate."
Rangel predicted that the bill would make banking secrecy "a thing of the past".
“This bill offers foreign banks a simple choice – if you wish to access our capital markets, you have to report on US account holders. I am confident that most banks will do the right thing," he stated.
The new proposals have been welcomed by the Obama administration, with Treasury Secretary Tim Geithner noting that they chime with the White House's aspirations to create a "level playing field" with regard to tax.
"This legislation fits well into the administration's dual-track strategy of improving our domestic tax laws while increasing global cooperation on tax information exchange to help narrow the tax gap and create the fairer tax system we need," Geithner concluded. contains details of the corporate and partnership legal structures available in the 50 most prominent offshore jurisdictions, together with descriptions of the most important business sectors in each jurisdiction, local tax regimes, and the international treaties entered into by each jurisdiction.


Wednesday, August 25, 2010


Endesa, sight wind power in the state.
Every day, technicians are monitoring the company's wind-power farms, with the goal of developing generation projects.
Since 2007, the company monitors wind, in Ceará, with the aim of developing projects to generate.
With a still incipient participation in the energy market in Brazil - 5% in distribution and only 1% in generation - Endesa group ,  controller of the Energy Company of Ceará (Coelce) already looks carefully the potential that represents the national territory for future investments. In the list of opportunities, the wind energy production is emphasized, with the state in the sights of the projects, according to the diary was found exclusively in the Northeast.
According to André Moragas Coast, Office of Institutional Relations and Communication, Endesa already has, since 2007, 15 wind measurement towers in the states of Ceara, Rio Grande do Norte and Rio Grande do Sul.  Daily, technical the company are monitoring these locations, with the aim of developing projects to generate such additional power in order auctions promoted wind energy in Brazil.
"The distribution market is consolidated. Thus, to grow in this segment would only occur through merger or acquisition of other companies, which is more difficult. But in the case of the generation market, we have several new energy projects, stimulated by auctions held, of the federal government, "he says.
Promising market

What makes Brazil says da Costa, as the country with the largest growth opportunities for the company's because, besides encouraging the sector, Endesa also owns low insertion in the national energy - 5% in distribution and only 1% generation - unlike others countries in South America, where the company also operates, and  where it reaches levels above 30% in both segments. This, despite on Brazil's focus that currently hold 25% of Endesa's assets in whole Latin America.
In the Chilean market, Endesa owns 35% in energy distribution and 34% in generation. In Peru, the proportion reaches 21% and 33% respectively. In Colombia the company stands out with 15% in distribution and 22% in generation. While in the Argentine market it participates with 15% and 22%, respectively.

In the Brazilian market, as well as Coelce, Endesa owns the Ampla, in Rio de Janeiro; Endesa Cachoeira, Goias, and Endesa CIEN, Rio Grande do Sul The company, a holding company owned by Spanish Endesa, was established in 2005 to administer the distribution business, generation, transmission and marketing of energy in the country.

 In the distribution area, with businesses Ampla and Coelce, it serves a total of 15 million people in states of Rio de Janeiro and Ceará. Currently, 92% of Endesa's capital belongs to the Italian group Enel, which since 2007 was already a shareholder of the company, the time together with Acciona, with the remaining 8% sprayed among other shareholders.

To generation, through Endesa Endesa Fortaleza and Cachoeira, the company has a capacity of 1,004 MW of energy. In transmission, it acts on the connection of 2,200 MW between Brazil and Argentina, made by Endesa Cien. Altogether, Endesa Brazil has 16,709 direct employees and collaborators.

In the case of the unit from Ceará.
The installed capacity is 346.63 MW, enough to supply one third of all energy consumed in Ceará. Located between Caucaia and Sao Goncalo do Amarante, the company is housed within of the Industrial and Port Complex Pecém (CIPP). In 2009, the thermal energy generated 528.64 GWh of total gross revenues of R$ 664.2 million and net income of R$ 254.7 million. This year, only the first three days of August, the generation has reached 168 MW.
With the expectation of reduced employment from 2,500 to 2,000 MW, according to executive director of the Association of Wind Energy (Abeeólica), Pedro Perrelli, the energy price in auctions for contracting projects for power generation based on the winds will be £ 167/MWh for both auctions: reserve and A-3.
The auctions, including biomass and small hydro (small hydroelectric) are planned for today and tomorrow, and both categories have specific characteristics regarding the fate of the energy generated, according to the Energy Research Company (EPE) Technically that enabled companies had shown interest in participating in the contest.
The auction reserve aims to ensure the supply of electricity in the country where they occur increased demand.

Another objective is to contribute to the recovery of water reservoirs, responsible for the overwhelming majority of the energy generated in the country

The energy gained from the sale of A-3, in which all projects must be submitted within three years after the conquest of the license is intended to supply the market demand.

This demand must be indicated by the distributors of energy this  programming  must to be previously submitted to EPE and that comply with the Energy Development Plan established for the period 2010 to 2019.

Since August 13, the companies authorized by EPE had to deposit guarantees, the Board of Electric Energy Commercialization (CCEE), to participate in auctions.

In all, 316 wind projects have been enabled for the auction reserve, totaling 8202 MW, which should be in full operation in September 2013. In offering A-3, 320 wind projects have been cleared, with 8034 MW generation and should be in October 2013, within the time limit for this type of event, which is three years from the license.

Corresponding to the wind potential of the state, the enterprises of Ceará stand out in the race. In all are, 96 projects which Ceará state has enabled for the Auction Reserve Alternative Sources.

In A-3, are 92 enterprises of Ceará enabled, these projects leave the state in second place, trailing only Rio Grande do Norte, who leads in number of projects.

Arce holds 1st fleet review by the Prainha

The Public Services Regulatory Agency of Delegates of the State of Ceará (Arce) will be held today, the first agreement provided for supervision of decentralization, agreed with the National Agency of Electric Energy. The visit of the technicians from Arce will occur at the plant from the beach of Prainha, in Aquiraz.
In the agreement, the Arce was licensed to regulate the operations of 10 plants from Ceará. "There, we will make a diagnosis of the plant.  We come to find out if she is doing what it was thought," says Eugene Bittencourt, coordinator of Arce energy.
According to him; he will evaluate the environmental licenses of operation, the record of occurrence in the daily bulletins of operation, as well as, the rules and the concession contracts that govern the plant, "among other things."

The next plants to be inspected will be Lagoa do Mato and Canoa Quebrada, in Aracati, both in September.

Purchase of land by foreigners back to have restrictions.

-Opinion AGU restores restrictions under the 5709 Act, 1971

“Advocate General of the Union, Luis Inacio Adams, said the government does not fear the decline of foreign investment in Brazil.”

The government yesterday reinstated the restrictions provided by law for the purchase of land in Brazil by Brazilian companies controlled by foreigners. The opinion of the Attorney General's Office, published yesterday in the Official Gazette, restores the restrictions under the 5709 Act, 1971.
The new text changes the understanding of the body itself. In 1994, the AGU has established the understanding that the law was not approved by the 1988 Constitution. Therefore, there would be restrictions on land purchases by Brazilian companies controlled by foreigners. Because of this lack of limitations, there is now a safe control in the country to gauge what is the extent of land in the hands of foreigners. 
Besides the new understanding of the AGU, the government argues sending a bill to Congress to extend the restrictions on purchasing land in Brazil, including foreign individuals residing in Brazil, a situation not embraced by the opinion of the Attorney-General Union
The discussion in the government over the imposition of restrictions on land purchases by these companies began in June 2007. In September 2008, the new opinion was ready and depended only on approval of President Luiz Inacio Lula da Silva. Due to the international financial crisis broke out that year, the government preferred to wait.
Advocate General of the Union, Luis Inacio Adams, said the government does not fear the decline of foreign investments in Brazil. Partly because, he said, just that companies needs to adapt to the new reality to continue buying land. To do so may, for example,  is be associated with national companies. "There are legal instruments able to give a solution to these situations," he said. "But the Constitution establishes that the control over the lands will be prioritized for nationals," he added.
The law provides that companies can buy up to 5000 hectares of land, never exceeding 25% of the municipal area in which the farm is located. If the property is in an area of national security, the buyer will require the prior approval of the Council of National Defense. In addition, the Registry Offices of Real Estate will retain special registration for land purchased by Brazilian companies controlled by foreigners.

(By State Agency)

Tuesday, August 24, 2010

Keeping an eye open...

-The newest crime modality on countries which are being very attractive for offer incredible opportunities on Real Estate business markets, are scaring out many investors nowadays, specially on South American Countries.
Be careful to don't be the next one to fell down on the web of the criminal gangs.

How it works?!

-Some criminal gangs are very organized to try to fool, innocent investors, especially investors who don’t know how the government works on real estate business.
Investors who are making the first investment overseas must to be very careful, in every step before close a business, especially on Real Estate purchase; many countries as Brazil for example don't have a policy to financing a Real Estate business.

-Here in Brazil for a foreigner make a financing he will need offer to the bank some warranty. For in case of, interruption with the payment or something similar the bank will have a property to execute for the open debit.
So keep an eye open with easy financing terms.

-But in the other hand many builders has their own way to make the investment overseas easier.
They offer their own credit lines, and they financing for foreigners investors in a contractual clauses terms, like:

-The investor can buy the property in terms of he will receive the registrations and the transference only after the complete payment.
And this has been working very well and also is very secure to both sides.
The other problem for an investor is the language, if you buy a property in a foreign country that doesn't have your mother language, and if you also are not a speaker of the this language, it can built a wall between you and salesperson. And behind this wall you don't know exactly what is going on... In this case you will need of assistance, of a translator, but not any one, you will need help of someone who can understand of this kind of negotiation.
And don't hesitate of ask for a second opinion, before make the business ask for your agent, for some eBook of how to make invest in the country that you are.
Ask how to proceed in this business, how to make the payment, and if he's able to inform all the details, he really knows what his doing with you.
And after this, ask him for his credentials, or registration ID. And keep it with you in case of some problem; this numbers will help you a lot.
The Other big Mistake:

Many brokers from other countries, and sometimes from your country works as Real Estate Brokers, in the country you decided to make your investment, and you may think that is great for you.
Because will make a negotiation with someone who speaks your language.

-Well the dark side of this is, usually this kind of broker works illegally on the country especially on Brazil where the supervision are very deficient. And if you have some problem, none authority will be able to help you with a possible problem.

And this "Broker" can disappear, and you may never more hear about him again.
Make some negotiation with someone without references is always a bad thing to do. So try to search for a native broker with registration. Is always the better choice to do in this case.

You can search for someone who can speak your language or other language you have some familiarization as English or Spanish, for example.

The documentation:

Every documents, of business that you will do will be on native language, so if you cannot understand, you will need to have a deep trust on your broker that, can make a copy of the same document translated in your language but this document don't will have any value, for the local law, only will accept only documents on native language as Brazil for example.

Criminal things!

Never forget to search for serious brokers, in many countries you will find criminal ones; they are applying coups all over the world.

Some weeks ago I met an American guy who was desperate with a bad negotiation he did. A group of criminal guys rented a huge mansion, and created fake documents and sold the house for this poor man.

When he was doing a recycling in the house the real owner appeared to ask what those guys were doing on his house, on this time all the mess started.
The American man, discovered, by the worse way, that had fallen in a coup.

The criminals created many fake documents and his without know any word on that papers paid more than U$D 400k in a house that never will be him.

I don't know if he will get his money back, but sincerely, I don’t think so…

So before something like this happens into your life. Ask for some help, if you need so. Over here you will find many decent people who are able to work and help you for sure.

So keep an eye open is never too much.
Bye bye, and have good investments

Monday, August 9, 2010

Money In and Out of Brazil.

Getting Money In and Out of Brazil
The process of getting monies in and out of Brazil is relatively straightforward if you follow the correct procedures. We know of a few property investors who tried to bypass these rules and ended up in great difficulties. In this article, we will look at the processes involved when sending money to purchase property in Brazil and the repatriation of monies received from the sale of your property. In addition, we will look at the best way to receive your rental income.
Sending Money to Purchase Property in Brazil
When you decide to purchase your property in Brazil, funds should be sent from your own bank, lawyers or currency brokers account to the sellers account via the Central Bank of Brazil (Banco do Brasil). The Central Bank of Brazil records your funds entering into Brazil and in order to release the funds, the seller will need to present the sale and purchase contract to the bank.
Lawyers and currency brokers operate a special bank account that enables them to send money on your behalf in your name and this is acceptable by the Central Bank of Brazil.
We strongly recommend you only use this official route, or you may have problems transferring funds out of Brazil when you sell your property in the future.
Repatriation of Rental Income
You have successfully purchased your investment property in Brazil and have got some fantastic tenants. Now you want to gain access to your rental income. You cannot open a bank account in Brazil unless you have a residency visa or a business there. Therefore, we recommend the appointment of a rental management company to collect the rent on your behalf or to buy into developments that will be ran as fully managed resorts. The management company will collect rent, account for taxes, help with maintenance and transfer your rental income to your bank account.
Rental income will be taxed at source (in Brazil) by the Brazilian government at approximately 15%. Most countries worldwide will allow tax relief to be claimed against this transaction.
You can transfer rental income at anytime, but in general, this is done on quarterly or half-yearly basis. These payments will need to be transferred into an account in the name of the person who owns the property, again via the Central Bank of Brazil.
Repatriation of Capital Gains
There are generally no limitations to returning funds overseas if they were originally registered with the Central Bank of Brazil at the time of purchase. In most cases, the lawyer handling the sale will arrange the transfer of funds.
Once you follow the correct channels, you should not have any problems getting your money in and out of Brazil. Brazil actively encourages overseas investment and has one of the most sophisticated banking systems in the world. We would recommend that you read our Purchase Process¹ section to get further details about investing in Brazil securely and successfully.

1- Purchase Process

Simple purchase process

Buying a property in Brazil is fairly straight-forward and foreigners are allowed unrestricted ownership of land and property. A foreign national has the same legal rights as Brazilians when it comes to property ownership, and all property is freehold.
Non-residents may invest in property through direct ownership from abroad, or through vehicles such as resident companies, partnerships or investment funds. There may be some restrictions in areas close to environmentally sensitive land like national parks, marine reserves and nature reserves. You may find also some restrictions to land near national borders and agricultural land.
With regard to rural property, there may be some restrictions regarding the size of the area to be acquired.

CPF (Cadastro de Pessoas Fisicas, Tax Code)

In the first instance, the purchaser is legally required to obtain a tax registration number known as a CPF - Cadastro de Pessoas Fisicas, which is similar to a social security number. The CPF number enables the investor to be uniquely identified for taxation and title purposes.
Your CPF number can be obtained within days and your lawyer will assist you in obtaining this. The whole process is relatively simple and can be conducted without you visiting Brazil, as long as you have given your lawyer power of attorney. We can recommend an independent lawyer who will help you to obtain your CPF number.

Money Transfer - Banco Central do Brazil

The cost of the purchase must be brought into Brazil through an international wire transfer to the Banco Central do Brasil (Central Bank of Brazil), which allows the Government to record all investment into the country from overseas. There are generally no limitations to returning funds overseas if they were originally registered with the Central Bank of Brazil at the time of purchase. Please note that Brazil levies a 1% "import" tax on transfer of funds from abroad.

Contracts and Legal

We always recommend the use of an independent lawyer when purchasing property abroad. We would be more than happy to put you in touch with a reputable English speaking lawyer to help you with your purchase.
Your lawyer will:
  • Check the current owners have the correct title to the property
  • Check for any charges and liabilities still owed on the property
  • Check the owners financial status/credibility
  • Check your contract and advise you on the obligations for both parties
  • Provide a translation of the contract into your native language
  • Help you through the payment/funds transfer
  • Ensure the property is registered in your name

Land Registration

The property registry system in Brazil is quite developed and safe. Each property is registered at one single registry, which records details of the entire commercial history and the physical identification of each property. This registration is carried out by private notary publics.
Access to all information about properties in Brazil is available to the public and includes details on ownership, mortgages and other pending debts. In the larger cities, these services may be automated.


At present it is not possible for foreigners to obtain Brazilian mortgages - however, this situation looks set to change with the rapidly increasing popularity of the country with overseas investors. Until then purchasers should arrange alternative financing in their own countries. Our financial advisers will be able to talk you through the best options available to you.

Typical Purchasing Costs

On purchase you will need to allow for approximately 7% - 8% of the purchase price to cover legal fees and taxes.
Purchase Tax
Between 3-4%
Notary Public Fees (Deeds)
Approx 1.25%
Registration of Deeds
Land Registry Fees
Approx 0.75%
Legal Fees
Between 1-2%
Total =
Approx 6-8%

Power of Attorney

Property purchases in Brazil can be completed entirely from overseas, by giving power of attorney to a lawyer in Brazil to sign the documents on your behalf. We can arrange this service for you.

Friday, August 6, 2010

Four Ways to Invest in Brazil's Growth .

In the recent meeting between the presidents of the United States and Brazil, Obama informed Lula that he would one day like to visit the Brazilian beaches and the Amazonian forest. The general misconception is that Brazil is merely a vacation destination with nothing more to offer than samba dancing and soccer games, whereas in fact, this country offers a great deal of diversity with various investment options. This article will look at four ways to participate in Brazil’s growth over the next few years in step with developments in the global economy.
The global crisis can be divided into four phases: a liquidity crisis which halted the flow of capital between financial institutions, a financial crisis in which stock markets collapsed and banks failed, an economic crisis marked by unemployment and low earnings and an inflation crisis, which is likely to occur as a result of the actions taken by world governments in response to the three earlier crises. Each of these global shocks has had (or will have) an indirect effect on Brazil and opportunities arise as a result of each phase.
The earlier “acts” in this article are investments that can be profitable in the short-term whereas the later ones are more appropriate for a long-term horizon.

Act I – Fixed Income

The Brazilian interest rate is at 11.25% which is notably higher than the rates set by the U.S. Federal Reserve or the European Central Bank of 0%-0.25% and 1.5%, respectively. To benefit from the high Brazilian interest rates an investor must be willing to accept the currency risk associated with holding the Brazilian Real which is over 30% off its high of last summer. The downturn in the Real has been a combination of risk aversion and forced liquidation which drove foreign investment back to home currencies, as well as a reduction in demand for commodities. The market’s appetite for risk should return in the near-term as government programs reinforce confidence and the commodities market should also expect a rebound in the long-term as discussed below.
The window on this opportunity is closing as the Brazilian Central Bank continues to cut rates. Just in the last month, they cut the overnight lending rate by 1.5%. Yet it remains far higher than what can be expected from other countries and well above the current Brazilian rate of inflation of approximately 6% (which continues to diminish). The Real has also strengthened recently as the Geithner plan reduces the level of overall fear. This rally may be temporary but over time one can expect the Real to continue its positive ascent. As Act I begins to wind down, other opportunities are emerging in Act II.
Act II – Banking Stocks
The financial sector was at ground zero of the crisis causing banking stocks to be among the first hit and most damaged. Brazilian banking stocks, such as Itau and Bradesco, could not avoid the contagion effect as they too suffered from diminished liquidity and a stagnating economic environment. Itau is now trading below $12 and Bradesco trades under $11 (both approached $26 last summer). But it would be inappropriate to place them in the same lot as U.S. or European banks since the underlying fundamentals of Brazilian banks are generally intact as their balance sheets are free of toxic assets. Brazilian banks are better capitalized than their U.S. counterparts and generally healthier as a result of banking reform in the 1990s. Itau recently announced a merger with Unibanco, making it the largest Latin American bank with the potential to become a global player.
The measures taken by governments worldwide to rescue banks may soon result in a bottoming of the financial crisis. The shares of Itau and Bradesco should benefit most from such a recovery as they are among the healthiest financial institutions and were indirect victims of the crisis. 

Act III – Consumer-Oriented Stocks

Many emerging markets are currently suffering because of their dependence on exports to the United States and other developed countries. Economic recovery of these export-driven nations cannot begin in earnest until the developed markets to which they sell recover as well. Brazil is in a unique position among developing countries in that it has a large internal market and a growing consumer class. Currently the Brazilian middle class (referred to as class “C”, with R$1,115 to R$4,807 in monthly revenue) grew nearly 4% between August and December of 2008 (primarily at the expense of lower-income classes). This increase occurred despite the drop in the Brazilian financial markets.
Unfortunately, not many Brazilian ADRs offer access to the middle class consumer market. Most of the pure plays are limited to the Brazilian stock market, including retailers such as Lojas Americanas, Pau de Acucar and Globex Utilidades.
The growth in Brazilian consumption will be temporarily curtailed as unemployment has recently increased nearly 2.5% percentage points to 8.2%. However, the Brazilian consumer should be more resilient than others and the growth of the middle class is a trend that will continue to evolve over the next several years. As the crisis continues to bring down the value of Brazilian consumer oriented companies, these stocks will become increasingly attractive in the mid-term.
Act IV - Commodities
The drop in worldwide demand for commodities has been one of the dominant factors that brought the crisis to Brazil. Unlike banking and consumer-oriented stocks, significant increases in commodity prices will be more dependent on a recovery of the global economy which many economists do not expect until 2010. As noted above, an inflation crisis may be imminent as many countries increase the money supply to stimulate their economies. A decline in global currency values will result in an increase in commodity values relative to those currencies. Moreover, the drought in investment activities has halted expansion projects of commodity producers. As a result, the capacity to provide additional supply will be unavailable once the economy recovers. Brazilian commodity producers such as oil company Petrobras (PBR), mining giant Companhia Vale Rio Doce (RIO), steel producer Gerdau (GGB) and sugar/ethanol producer Cosan (CZZ) should all benefit from the rise in commodity prices.
Since the inflation stage of the crisis is still well ahead of us patience is required for these investments. One option to reap more immediate rewards is to invest in debt securities issued by these companies.
Brazil is not immune to the global crisis, yet it is likely to pull out of it quicker and more robustly than most other nations. The 1997 Asian crisis had a devastating impact on emerging markets but only slightly injured developed economies. The current crisis may play out in an inverse fashion with developed countries experiencing the worst and a handful of emerging economies coming out on top.
Just as the 1997 crisis provided a buying opportunity in the developed world’s financial markets, this crisis is doing the same for Brazil. The liquidity crisis reduced interest rates and caused a flight to the dollar which made Brazilian interest rates comparatively higher and the Real cheap. The financial crisis brought down otherwise healthy Brazilian banks and the economic crisis is providing a unique entry point to reap the benefits of Brazil’s growing consumer class. Down the line, the upcoming inflation crisis will bolster Brazil’s commodities companies. Currently, we are on the tail end of Act I and entering Act II but the biggest upside potential may lie in Acts III and IV.

Brazil Investments.

Dear investor.

We have the best solutions for your investment, land plots, houses, shoppings and apartments, by the sea or don't. In Fortaleza as well in others areas of all over Brazil territory, let us know about your necessity, and we will find out the perfect solution for your investment.
For more details, please get in contact with us.

Kind regards.

Jose Gualberto.