Alexandre Rocha*
São Paulo – Brazil wants to attract Arab investors to its capital market. It is with this objective that a group of representatives of the government and of the private sector will be in Saudi Arabia during the weekend. "The idea is to show that Brazil is an alternative and very viable destination for Saudi capitals," said the Brazilian ambassador in Riyadh, Isnard Penha Brasil Júnior, by telephone to ANBA.
The trip is organized by the Brazilian Foreign Office (Itamaraty) and is going to include meetings with Hamad Al-Sayari, president of the Saudi Arabian Monetary Agency (SAMA), the central bank of that country; Jammaz Bin Abdullah Al-Suhaimi, president of the Capital Market Authority (CMA); Abdul Rahman Ali Al-Jeraisy, president of the Council of Saudi Chambers of Commerce and Industry. Al-Jeraisy is also the president of the Al-Jeraisy group, which operates in various sectors and is among the largest in the country, and of the Riyadh Chamber of Commerce and Industry (RCCI).
The Brazilians are also going to meet with Fahd Al-Sultan, secretary general of the Council of Chambers; Hussein Athel, secretary general of the RCCI; and Amr Abdullah Al-Dabbagh, president at Sagia, the Saudi Arabian General Investment Authority.
"The Saudis have been showing interest in the Brazilian market, including groups like Bin Talal and Al-Jeraisy," stated Isnard. Bin Talal is another large Saudi business group and belongs to prince Waleed Bin Talal. The ambassador recalls that Saudi Arabia has capital available for investment due to oil revenues.
The Brazilian representatives will include Eduardo Manhães, superintendent of foreign relations of the Brazilian Securities and Exchange Commission, the organization that regulates the capital market in Brazil; Otávio Ladeira de Medeiros, general coordinator of strategic planning of the public debt, who is going to represent the National Treasury and the Finance Ministry; Alfredo Moraes and Paulo Sampaio, of the National Association of Financial Market Institutions (Andima); Mauro Mello, director at the Union of Stock and Security Brokers; and Milton Milione, president of the Association of Investment and Capital Market Analysis Professionals.
The group is going to present to the Saudis how the Brazilian capital market works and its size. "We hope that partnerships may arise from this. I believe it will work out," stated the Brazilian ambassador.
According to Rodrigo Cabral, of the National Treasury general coordinator of strategic planning of the public debt, the idea is to show that Brazil has solid macroeconomical fundaments, is responsible in conducting tax and monetary policies, in the management of the public debt, in the control of inflation and is less and less vulnerable.
Some examples of recent measures that should be mentioned are the anticipated purchase of the so-called Brady bonds, issued during the renegotiation of the Brazilian foreign debt in 1994, for the value of US$ 6.64 billion, and the government decision of eliminating income tax on profits made by foreign investors with bonds of the public debt. This year Brazil also paid its debt to the International Monetary Fund (IMF), making a payment of US$ 15.5 billion.
"The debt market, like the capital market, is attractive, secure, has a large volume and great liquidity," stated Cabral.
Share market on the rise
Another important point is the share market, which is living a good phase in Brazil. The São Paulo Stock Exchange Index (Ibovespa) has risen 11.4% this year up to March 08 and 27.7% last year. The Ibovespa is the main indicator of the behaviour of shares negotiated at the Bovespa, which is the largest stock exchange in Latin America.
Over 3.7 million deals were made on the Brazilian stock market from January to March 08, reaching a value of R$ 108.4 billion (US$ 50.150 billion, all dollar values at current exchange rates), with a daily average of R$ 2.4 billion (US$ 1.11 billion). In 2005, the total value of deals was 15.5 million for the value of R$ 401 billion (US$ 185.519 billion), with a daily average of R$ 1.6 billion (US$ 740 million).
Nowadays foreign investment answers to 36.3% of the deals at the Bovespa and a total of 380 companies have their shares listed on stock markets.
*Translated by Mark Ament
