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Brazilian Stock Market Riding High
Mar 6, 2006 - Linknet Finance News

Brazilian Stock Market Riding High

Brazilian Stock Market Riding High

Mar 6, 2006 - Linknet Finance News - When it comes to investments, Brazil's stock market has been one of the best performing over the past five years. A five-year investment in Brazil's Bovespa Index yielded 11.8 times the growth of the S&P 500 Index in the U.S. and more than twice the gains of the Canadian TSX Composite.

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The Bovespa Index has risen 366 per cent since it reached its bottom in 2002. The index now trades at around 39,177. The five year annualized return was 19.42%, compared to 2.36% for the U.S. and 9.63% for Canada.

Just to put the Bovespa in context, its market capitalization is 7 billion US compared to .46 trillion US for the Canadian TSX Composite Index. The Bovespa trades at 11.76 times earnings compared to 20.6 times earnings for the TSX. It carries a dividend yield of 5.24% compared to 1.94% for the TSX.

The reason for the more impressive sounding numbers is that investment in Brazil comes with considerably more risk. Brazil has a 10% unemployment rate, and more than 6% annual inflation.

Most analysts think a correction is overdue in Brazil, so new investors into this market are probably wise to wait till it happens.

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