Brazil Stock Market Has Fifth Month of Foreign Inflows in 2009

By Paulo Winterstein and Heloiza Canassa
Aug. 5 (Bloomberg) -- International investors increased their Brazilian stock holdings for the fifth month this year as speculation the global economy is recovering drove the benchmark index’s best July performance in more than a decade.
Foreign investors bought 2.2 billion reais ($1.2 billion) more in equities than they sold in July, exchange owner BM&FBovespa SA said in a statement on its Web site. That follows a net outflow of 1.1 billion reais in June, when the Bovespa stock index retreated 3.3 percent.
The Bovespa rallied 6.4 percent last month. The 64-stock gauge has gained 49 percent this year, led by real estate and retail companies, on speculation record low interest rates and improved demand for the country’s commodities will boost growth in Latin America’s biggest economy.
With July’s inflow, investors have added 12.3 billion reais to their Brazilian stock holdings this year. Investors took out more than 24 billion reais from the market in 2008 as the global financial crisis deepened.
Brazil’s economy will contract 0.38 percent this year before expanding by 3.6 percent in 2010, according to the median forecast in a central bank survey of about 100 economists published this week. Policy makers reduced the benchmark interest rate to a record 8.75 percent last month.
International investors bought 41.8 billion reais of stocks in July and sold 39.6 billion reais, Sao Paulo-based BM&FBovespa said.