Saxo Bank (Saxo Bank)
Markets  |  September 10, 2012 15:25:03

Investment Opportunities in Brazil: World Cup and the Olympics

Brazil will organize the World Cup in 2014 and the Olympics in 2016. Short-term gains for me are rather limited, but long-term prospects it sounds interesting. Countries are significantly strengthen its infrastructure and will probably evolve in a positive direction.

The Brazilian branch of the organization will be the two major sporting events to benefit the most? It's all about tourism, retail, construction, telecommunications and transportation. Let's look at a few specific companies.

Brazilian stocks

In the above-mentioned companies find several local shares, which could use them to your advantage role of Brazil as host country.

As rises Brazilian tourism, is also related to an increased demand for products and services in the sector of consumer services and non-durable goods. Specifically brewery AmBev and operator of supermarkets and hyper-CBD (Companhia Brasileira de Distibuicao Grupo Pao de Acucar). It is assumed that Brazilian tourism in Between 2014 and In 2016 more than doubled. Therefore, it is likely that also increases local demand for products of these two companies. Analysts are achieved within three years of growth in earnings per share (EPS) at AmBev 12.5 percent and 26.6 percent in the CBD.

Expect strong growth in Brazil in the coming years also energy, and due to increased demand for electricity. Country plans by the end of 2014, increasing the total electricity production from 70 thousand to 90 thousand megawatts. This development could also benefit the company CEMIG and Tractebel, manufacturers and distributors of electrical energy.

In order to land successfully organize events such as the Olympics and the football championship, must also have reliable telecommunications systems. The Brazilian government last year announced that the modernization of telecommunications infrastructure will spend $ 7.2 billion.Tourism boom could then enjoy the main players in this industry.

The largest telephone operators in Brazil are Telefonica and Oi. Telefonica Brasil shares are not liquid, because most of their own Spanish Telefonica. That is why you should focus on when trading the parent company. Telefonica has a strong Latin America and Brazil is covered by one of its key markets.

International stocks overlap with Brazilian

If you are to invest in Brazilian stocks directly are not comfortable, there are a few international companies that have strong links to the Brazilian economy and positive developments in the economy might grow. And because only a portion of their income comes from Brazil, it is a broader diversification of investments than in the actual trading of local shares.

An example can be   Canadian company Kinross Gold Corp, which belongs to the Troika's largest gold producers in Brazil. This company I mentioned is because before the Olympics, Brazil intends to invest in roads, railways and ports, which could help to efficiently export Kinross. And that goes for other companies that actively exports its products from Brazil to other parts of the world.

Although these companies and their shares can support improved infrastructure and the expansion of tourism, prior to each investment decision should be considered additional indicators specific to each company.

Another option is to invest in the Brazilian stock index

If you are tired of picking individual stocks, this is an opportunity to invest in the Bovespa index.
From our earlier analysis showed that the indexes associated with the countries hosting the Summer Olympics outperform global indices. Specifically, a year after the games were held. ASX indices, and the Hang Seng ATHEX in the period after 2000, 2004 and 2008 fared better than global markets.

In addition, for emerging market like Brazil's growth potential of the economy is good news. Local market will help even larger share of advertising, because Brazil is doing everything possible to attract foreign investors.

Brazil and companies linked to the economy can benefit from the hype around the World Cup in 2014 and Two years later, in the summer Olympics. Tourism development and improving global awareness of Brazil country in the future will definitely bring many benefits.

Sverrir Sverrisson, equity analyst at Saxo Bank

 Globální online investiční banka

Saxo Bank je globální investiční banka specializující se na online obchodování a investice na mezinárodních finančních trzích. Saxo Bank umožňuje soukromým investorům a institucionálním klientům obchodovat s FX, CFD, cennými papíry, futures, opcemi a dalšími deriváty a poskytuje i profesionální správu portfolia a fondů díky svým online obchodním platformám oceněným řadou různých ocenění.

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