New Record Foreign Investments Into Brazilian Stocks in October, 100% Higher Than Previous Record

Foreign investors bought U.S. $ 14.449B of Brazilian stocks in the month of October, the highest since January 1947. The figure is a new record and almost 100% higher than the old milestone reached earlier in December 2007 (U.S. $ 7.513B).

The strong result, according to the central bank , was directly influenced by the release of shares of the Brazilian subsidiary of Banco Santander, which took place earlier this month. The net for October is comparable to that observed in the first nine months of 2009, from January to September, when the transactions totaled U.S. $17.267B.

$9.705B of the total was earmarked for the purchase of stocks traded in Brazil. The rest (U.S. $ 4.744B) was allocated in Brazilian stocks receipts (ADRs) traded on foreign markets. The result shows reversal of trend observed in October last year, the first month after the worsening global crisis, when foreigners withdrew U.S. $ 6.065B from the Brazilian stock market.

From January to October, foreign investment in Brazilian shares is U.S. $ 31.716B. They also bought the equivalent of U.S. $ 2.670B in Brazilian bond and fixed income.

On October 20, the government began to collect tax on Financial Operations (IOF) of foreign investments in fixed income and stocks. A week ago, the collection was extended to transactions with shares of Brazilian companies abroad (ADRs). The measure aims to prevent investors from acquiring shares abroad and not in Brazil as loop-hole from the IOF tax. According to the Treasury, in the first ten days of duration, this tax has already provided the government a revenue of $ 100M.

Foreign Direct Investment in Brazil totaled U.S. $ 1.563B in October, a figure lower than that recorded in September (U.S. $ 1.816B). In October 2008, the first month after the deepening crisis, the country had received $ 3.913B. From January to October 2009, the inflow of productive investment is U.S. $ 19.254B, equivalent to 1.64% of GDP. In the same period of 2008, Brazil received U.S. $ 34.768B, representing 2.63% of GDP. In the 12 months ended in October 2009, the flow of shipments to the country totaled $ 29.544B, or 2.07% of GDP.

The current account balance of payments - which records all transactions and services trade between Brazil and abroad - in October had a deficit of U.S. $ 2.911B, 26% higher than recorded in September, according to CB.