Brazil Continues to Outperform

I believe that each day it becomes clearer that emerging markets are outperforming more developed economies like the U.S., Europe and Japan. Among all emerging economies, China and Brazil are attracting more attention. In fact, both countries have strong economic ties, as Brazil is the biggest supplier of raw materials and commodities to China.

In this sense we would like to stress that yesterday the Brazilian benchmark Bovespa reached the level it was just before September 15, before the Lehman Brothers failure.

Despite the continued appreciation of the Brazilian benchmark, we still believe there is room for more in the short-term. However, we continue to recommend companies focused on Brazilian domestic demand like Oi Participacoes (TNE - Analyst Report), CPFL (CPL - Analyst Report) and AmBev (ABV - Analyst Report), rather than huge commodity producers like Petrobras (PBR - Analyst Report) and Vale (RIO).