Brazil: The Next Big Thing?

Martin Weiss, Ph.D. examines the Brazilian market and the factors influencing the growth the economy is experiencing. In this issue of Money and Markets, Dr. Weiss discusses Brazil's economy and how and why its marketplace is headed towards great growth.

Jupiter, Fla. (PRWEB) May 24, 2007 -- Martin Weiss, Ph.D. examines the Brazilian market and the factors influencing the growth the economy is experiencing. He discusses discusses Brazil's economy and how and why its marketplace is headed towards great growth.

Just this week, Standard & Poor's surprised the financial markets with an upgrade of Brazil's credit rating, prompting another surge in Brazilian assets.

"Brazil's currency, the real, jumped by the most since September, hit a new six-year high, and busted through the 2-per-dollar level for the first time since 2001," according to Dr. Weiss.

What are the forces behind Brazil's market blast-off this year?

The first force is the underlying firmness of Brazil's launch pad, its foundation for growth. Brazil's President, Luiz Inácio Lula da Silva, built that foundation by actually holding back the economy.

He paid off the country's debt to the IMF. He built a huge trade surplus and made big headway in balancing the federal budget.

And he focused on stabilizing the currency.

For most of this decade, while China was growing by leaps and bounds, Brazil was lagging behind. But all that changed early this year: Brazil's government has taken new steps to unleash pent-up demand and let the economy start taking off.

"This investment explosion is key. With it, Brazil is revving up for an economic take-off that could rival China's and India's," Dr. Weiss explained in January.

Finally, Brazil's currency, the real, is the strongest among all major currencies in the world this year. Its stock market is leaping ahead of all other major markets. Brazil is now in the spotlight, beginning to attract a torrent of international capital:

South Korean car manufacturer Hyundai announced plans to open a new facility in Brazil. Brazilian airline TAM signed a partnership agreement with U.S. carrier United Airlines and a delegation of 16 Saudi businessmen are eyeing new investment opportunities.

Like Brazil's, Hong Kong's economy has been lagging that of most of its neighbors. And although this city-state may be tiny in area, it's a heavyweight economically.

• Hong Kong's economy is larger than Argentina's, Thailand's, Malaysia's, or New Zealand's.

• Hong Kong is the second largest venture capital center in Asia, managing about 27% of the total capital pool in the region.

• Overall, the Hong Kong stock exchange ranks seventh in the world in total capitalization.

Free enterprise is a huge factor, although Hong Kong has long been the world leader in this aspect:

1. Low taxes: The top corporate income tax rate in Hong Kong is only 17.5% compared to 35% in the U.S.

2. Business freedom: Starting a new business in Hong Kong takes an average of just 11 days, compared to the worldwide average of 48 days.

3. Freedom from government: Government spending in Hong Kong is 18.3% of GDP. The U.S. government consumes 25.5% of GDP, the UK's takes 37%, and France's 43.7%.

4. Investment freedom: There are virtually no rules against transferring currency in or out of Hong Kong, buying real estate, or repatriating profits.

5. Trade freedom: Other than duties on liquor, tobacco, oil and methyl alcohol, trade is virtually duty-free, and Hong Kong's average tariff rate is close to zero percent.

Most important, like Brazil, Hong Kong is now likely to attract a great influx of international capital.

According to the United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2006, Hong Kong is Asia's second largest destination for foreign direct investment and the sixth largest destination in the entire world.

Hong Kong companies invested $520 billion in inward direct investment, more than 293% of GDP.

"The Chinese have the largest pot of currency reserves of any nation on earth. Now, we expect a large chunk of that cash is going to be pumped into Hong Kong stocks," explains Dr. Weiss.

For more information and to read the full article, visit this link:

http://www.moneyandmarkets.com/press.asp?rls_id=788&cat_id=6&

About Dr. Martin Weiss & Money and Markets

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

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