Loading ...News - Brazil inflows seen robust despite controls-ANBIMA
*Inflows from Japan investors especially strong
*Healthy fundamentals, low inflation draws investments
*Japan investors put $1 bln into Brazil fund on Wednesday (Adds comments, background, byline)
TOKYO, Nov 25 (Reuters) - Brazil is expected to see strong foreign fund inflows backed by its healthy fundamentals and long-term growth prospects despite its recent capital control steps, an executive of a Brazilian financial body said on Wednesday.
Foreign portfolio investments by Japanese have been particularly strong and the pace has picked up since October, when Brazil was selected to host the 2016 Olympics, Pedro Bastos, a director of Brazilian Financial and Capital Markets Association (ANBIMA), told a news conference in Tokyo.
“If you are a long-term equity investor, a 2 percent tax on a market that’s up 80 percent on a nominal basis and 133 percent on a dollar basis is not a deterrent,” Bastos said.
But he said it will take time for the market to see the impact of Brazil’s one-month-old tax measure aimed at helping to brake appreciation of the country’s currency, the real.(BRBY)
Brazil will charge a 2 percent financial transactions tax on foreign investment flows in stocks and bonds, but the tax will be charged only once. [ID:n19264977]
Brazil has been attracting investors due to its healthy economic fundamentals, with its inflation well under control, Bastos said.
Increasing consumption and prospects of development of infrastructure linked to the Olympics and oil fields are also among key driving forces attracting investments, he said.
Bastos said the readiness of Japanese to invest in Brazilian equities and fixed-income products, as well as in the the real, had picked up significantly in the last two to three months.
“Japanese investors have been long-term investors. Even during the depths of the crisis last year we didn’t see any significant outflows,” Bastos said.
“They held onto their positions. Now that it has become clearer that the worst of the financial recession is over, I think their willingness to take risk is back again.”
Japanese individuals hold about $15 trillion in personal savings largely parked in low-yielding accounts, and retail investors have been taking on more risk as the global economy picks up and while the Tokyo stock market lags other markets.
Brazil’s key Bovespa stock index .BVSP has surged 80 percent since the start of the year, while as of Wednesday, Japan’s Nikkei average .N255 had risen only 7 percent.
Since the start of the year, retail investors have been taking on more exposure in mutual funds linked to Brazilian equities and bonds.
In addition, yield-hungry retail investors have been flocking into investment trust funds, similar to mutual funds known as “toushin”, that allow holders to select a currency, including the high-yielding real.
On Wednesday, new Brazilian equities toushins managed by Daiwa Asset Management were launched, drawing 93 billion yen ($1.05 billion) of funds from Japanese investors.
Another Brazilian toushin that invests in the Latin American country’s infrastructure-related shares is due to be launched later in the week.
Source: Reuters.
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