James Hartje's  Instablog

Looking to gain exposure abroad, there’s no better place than to continue to invest in other than the booming economy of Brazil. To me Brazil is the strongest of all the BRIC countries. Why? The government has done a good job at controlling both inflation and keeping interest rates low allowing many companies to continue to expand. Adding to this they have been very supportive and taking many initiatives to improve their own economy. We have seen this with the strength of the real compared to other global currencies, growing GDP numbers, and an increase in consumer products. So you might still have your concerns about Brazil on how Latin America is heavily dependent on commodities. What ifChina starts to slow down? First, yes commodity prices will weaken if China slashes its demand however Brazil has become a strong enough consumer nation where they will be able to keep the economy going. Adding to this Brazil has grown its ability to outsource to other countries reducing its reliance on China.

How to play the Brazilian market?

PetroBras (PBR) – Love this stock however it has been the worst performing stock in Brail throughout the first half of the year due to capital problems and the BP Oil Spill. I feel this overhang has kept the stock low which presents a great buying opportunity as PBR continues to be under-valued when matched up against it’s peers. My gut feeling is once these few issues are washed away this stock will rise.

Vale (VALE) – Vale is the safest bet in my opinion of all the big mining giants. Vale has made smart moves in reducing its reliance on China by expanding its shipments to other countries. In 2010 China accounted for 32% of Vale’s revenues compared to 45% in 2009. Overall lower exposure to China and increased diversification of exported materials will strengthen Vale’s long-term appeal and lower it’s earnings volatility.

Banco Santander (STD) – String of moves recently have been incredible in strengthening the banks position and reducing its Spanish Exposure. Being a high yielding bank with large growth potential I am very impressed with the resilience in the past few months and believe it’s a strong buy.

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