Investing In Brazil: Igor Cornelsen's Top 3 Tips

Igor Cornelsen gives advice to those looking to invest in his home country

Dec 31, 2014, 17:31 ET from Igor Cornelsen

MIAMI, Dec. 31, 2014 /PRNewswire/ -- The world's eye is turned to Brazil. This past summer the World Cup captivated audiences and the Summer 2016 Olympic Games in Rio are bound to do the same. While it may seem like all the excitement is sports related, the country's economic climate is also getting a lot of attention. The experiment known as the "new economic matrix" has failed. Despite promises from newly re-elected President Dilma Roussef to change directions, experts say she will most likely stick to her populist policies-- even though they garnered no economic growth in 2014. Brazil's best hope is to return to the market oriented economy that proved fruitful up until 2008.

The "new economic matrix" slashed stock prices within the markets, particularly in sectors in which the government has intervened. With an average annual GDP growth rate of less than 2%, taking it to $2.5 trillion, it has disappointed investors in the past 6 years. In spite of that Brazil is still the eight largest economy in the world-- and with its rich base of natural resources, competitive agriculture production and a growing middle class it is poised to rise, provided it has the right economic policies.

The best hope for Brazilian market oriented reform and fiscal austerity comes with the newly appointed Finance Minister Joaquin Levy. Mr. Levy is a PhD from Chicago University and has had good experience in Federal administration from 2002 until 2007. He has seemingly prepared the necessary reforms in order to bring the economy back on track after six years of bad ideas.

Additionally investors are wary of the market's negative reaction to a series of financial scandals at the hands of Brazilian energy company Petrobras. As the company heads to court in 2015 and responsible parties are prosecuted, Petrorbras will adjust their balance sheet and the market is slated to reflect the correction.

Despite the scandals, Brazil has several attractive qualities for investors. Brazil is a huge market of more than 200 million inhabitants and it is a great market for multinationals. As one of the world's top food suppliers, Brazil will have to grow as a producer to keep up with demand. As the largest South American country, Brazil is a natural choice for infrastructure development. As far as the new and innovative goes, investors are spoiled with variety; some Brazilian products are still not available to consumers worldwide.

With the price of stocks quite possibly in the bottom of a cycle and the inherent allure of Brazil's natural resources, more people are considering starting new business in the country. This very well could be the turning point of a new Brazilian economy. It's an exciting time to invest in Brazil, that's for sure... But where to start? Igor Cornelsen has the answer for you.

Igor Cornelsen, a top Brazilian banker and investment expert, wants to offer you three important tips to consider before investing in his country. Cornelsen has always known the potential for Brazil to become a key player in world economics and is excited to see the growing interest in this vibrant country.

By following these three tips from Igor Cornelsen, you'll be prepared to join the Brazilian market in 2015.

1. Connect with natives

Like all aspects of Brazilian culture, business and finance in Brazil rely on relationships and networking. According to Cornelsen finding connections in Brazil should not be difficult-- one in four Brazilians between the ages of 18 and 64 are entrepreneurs! Brazilians are a social bunch that welcome and accept even the most minute bit of chit chat; they'll be happy to give you advice based on their own experiences.

2. Prepare for the red tape

Cornelsen advises potential investors to be prepared for plenty of regulations when entering the Brazilian market. Restrictive labor market rigidity, regulatory complexity, high taxes, and pervasive bureaucracy are all obstacles investors must face. The truth is the Brazilian market is growing-- but it is still fragile, hence why there is so much regulation trying to protect it. While it takes a lot of work to get around these barriers, the payoff for smart investors is huge. "Those who make informed decisions and put the work in are the ones who will see the big payoffs in the end," says Cornelsen.

3. Know foreign-currency restrictions

It's also important to note that there are tight controls of foreign-currency transactions and foreign-currency transactions can only be effected through authorized financial institutions. "You must find a bank authorized to deal in foreign exchange to hold local-currency if you or your business are non-residential," says Cornelsen. Also know that there is no single exchange rate for foreign currency-- it depends on the nature of the transaction.The official commercial rate is used for most transactions, but Brazil's Central Bank can intervene to control this rate at will. Be sure you're using the right rate for the right transaction at all times. Sure it can get complicated, but that's what makes it profitable. "There's no such thing as free money," Cornelsen points out.

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SOURCE Igor Cornelsen