Despite Economic Weakness, Brazil Still Shines for SWFs

April 04, 2014 by Antonia Oprita

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Rio de Janeiro Brazil’s sharp currency depreciation, rising interest rates and increasing need for infrastructure and energy investment offer good investment opportunities for sovereign wealth funds — if they’re willing to withstand the macroeconomic risks. MANY INVESTORS IN LATIN AMERICA could be forgiven for believing that Brazil’s best days are behind it. Economic growth has halved from an annualized 4.5 percent in the boom years between 2004 and 2010. Inflation remains stubbornly high at more than 5.5 percent. The nation’s currency, the real, has depreciated sharply, falling 15 percent since May 2013, and the local stock market has tanked, plunging by 20 percent in the same period. Investment by sovereign wealth funds has slowed too. In 2013 sovereign funds announced four Brazilian deals and completed just three, worth a combined $609 million. That sum was less than a quarter of the $2.8 billion total for 2012, when they closed a…

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