Igor Cornelsen is an investment expert and one of the top bankers in Brazil. When discussing why Brazilian banks were able to weather the economic storm that took place in 2014, Cornelsen said it was because they understood how the markets worked.
Brazilian bankers in the private sector would only lend to borrowers who were considered credit worthy. This meant all other borrowers had to depend on public sector banks.
Cornelsen believes that in order for investors to feel safe with investing their money in Brazil, the government will have to step up and instill reforms and fiscal austerity that are market oriented.
But that’s not all that needs to be done. Igor Cornelsen also believes investors are going to have to do their part and take the time to educate themselves on the world of Brazilian banking.
With that being said, here are a few basics Cornelsen believes every investor needs to understand before investing in Brazil.
#1 – There Are 10 Major Banks That Run The Show
The Brazilian economy is backed by 10 major banks. They are Banco J Safra, Banrisul, Santander, BTG Pactual, Banco do Brasil, HSBC, Citibank Brazil, Caixa Economica Federal, Banco Itau and Banco Bradesco.
#2 – The New Finance Minister May Be Able To Turn Things Around
Joaquim Levy, the new finance minister, brings with him fresh ideas that have the potential to turn things around. He is known as a shrewd policymaker and a friend to those in the private sector.
Even still, only time will tell if real reform will take place under his leadership.
#3 – China Is A Big Deal
The Chinese economy and the Brazilian economy are intrinsically linked. China is the largest trading partner Brazil has. That means whatever goes on in the Chinese economy will have a direct impact on Brazil’s economy.
On the other hand, China is also one of Brazil’s biggest competitors when it comes to exports. As an investor it is very important you know who the trading partners are and how they impact the overall economy.
#4 – Know The Real Value of Brazil’s Currency
Brazil has had an overvalued currency for many years now. Because of this exports of industrialized goods have lost their value. If you don’t understand the real value of the local currency before you invest, you may end up losing a ton of money at a very rapid pace.