Real Estate Fund, Brazil, Asset Management

Why Brazil

Brazil is the 5th Largest country based in terms of land and population.  At present it is the world's 8th largest economy in terms of GDP (Trillion dollar economy !) and is expected to become the 5th largest  by Goldman Sachs. Economic Indicators Brazil continues to show solid economic growth (5%+ for 2010) combined with benign inflation rates, with strong consumer spending and confidence. Most forecasters including the major investment banks such as Goldman Sachs etc, the Rating Agencies, the Brazilian Central Bank and government statistics point to a strong economy showing good growth prospects, reducing poverty, a growing middle class. Brazil has strong employment growth. At present unemployment is less than 8% (from 12%+ in 2002 and is now lower than in USA, UK, etc), and in 2010 a further 1 million jobs will be created.  The Economy is growing and GDP is expected to grow by 5% in 2010 while inflation is low/benign. For Brazil, interest rates are at a historical low - All time low base rate (Selic is ~10%) Positive fundamentals , practically no government deficit, Credible Central Bank, Good government policies and over $220 billion in external reserves means economy is well cushioned. (for example Brazil has been getting a lot of the dollar carry trade due to the relatively high returns in Brazil hence the government introduced a 2% levy on capital inflows such as these). Vast natural resources Brazil is self-sufficient in oil and the top producer of ethanol. The Pre-Sal find in 2007 estimated will lift Brazil to 5th largest oil producing country with reserves exceeding those of Russia.  Santos Basin contains 2 billion barrels recoverable reserves It contains 25% of the world’s arable land (half is currently unused) excluding the rainforest. Brazil is an Agricultural Superpower and is the world’s number one producer of tobacco sugar, oranges and coffee; producing 85% of the world’s orange juice concentrate and the world’s largest exporter of beef, chicken, green coffee, sugar, ethanol, tobacco, and the “soya complex” of beans, meal and oil. Interest Rates Brazil’s SELIC ( Central Bank overnight interest rate), CDI (interbank average overnight interest rate) and Real interest rates are at historical lows (~10%). The market expects monetary tightening during 2010. The country has a strong sound Banking System and has not experienced a credit crisis like t

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