Brazil has been spending a lot of money on infrastructure in recent years. It has also been busy cleaning up the slums in Rio de Janeiro. Police and military personnel have been moving in to take control while the cartels have been slipping away in the middle of the night. They are also working diligently to bring electricity and sewer systems into these neighborhoods, elevating the living situation for the hundreds of thousands that call the favelas home. Brazil is also rich in land, resources, and labor. It has a great advantage in trade as well.
At the end of 2011 Brazil posted its highest trade surplus in four years. Brazil’s trade surplus soared 47.8 percent compared with the previous year, to nearly $30 billion. Exports of goods rose 26.8 percent to $256 billion and imports rose to 25.7 percent to $226 billion. These are the country’s highest export and import levels since 2007, according to Brazil’s foreign trade ministry. This follows last month’s supplanting of Britain as the world’s sixth largest economy. Brazil’s exports went first to China, then to the United States and Argentina. The Latin American country is still expecting an increase in 2012, looking toward another record year. There is also greater than expected competition for Brazilian products and a resumption of the currency manipulation by developed countries.
With record trade numbers such as these, there lies a good opportunity for investing in the Brazilian real. The WisdomTree Dreyfus Brazilian Real Fund (BZF) is a great investment vehicle. WisdomTree’s ETFs are known for their consistency. BZF is currently trading near its 52 week low, which means it is a great time to scoop up this ETF. The increase in Brazilian trade will serve to boost the currency as well.
2011 has already proven to be a great year for the real against the US dollar. The iShares MSCI Brazil Index ETF (EWZ) is also trading close to its 52 week low. So far this fund has already soared in trading on the announcement of Brazil’s trade numbers. EWZ still has quite a way to go before it peaks, however. This is a great time to make a play on Brazil. The country will only continue to grow from here.
Brazil is still rich in resources that have yet to be tapped. Infrastructure is climbing along with utilities. Foreign direct investment in Brazil is surging. Now is the time to play Brazil for the long-term and reap the rewards. The new year is seeing newfound optimism in Europe. Greece has found money after all. This means that external threats to Brazil’s growth are continually diminishing. Soon these threats will fall by the wayside and only growth will remain.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.