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THE leaders of Brazil, Russia, India and China, the BRIC countries, are  starting today a two-day summit meeting in the Brazilian capital, Brasília. That´s the second time the four developing-market giants hold a summit. The first was in Russia last year. Economic and financial issues Discussions are expected to be held on  the need for changes in global institutions, including the International Monetary Fund (IMF) and the World Bank, and on updating the regulation of financial markets to avoid another global crisis. In Yekaterinburg, 2009, they discussed the possibility of creating a new global reserve currency to replace the dollar.  President Luiz Inacio Lula da Silva is the host of the meeting attended by Chinese President Hu Jintao, Russian President Dmitry Medvedev and Indian Prime Minister Manmohan Singh.

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When the Chinese president Hu Jintao arrives in Brazil next Friday for the second BRIC - Brazil, Russia, India and China – summit, scheduled from April 14 to 17, in Brasília, one of the main topics of his conversation with president Luis Inácio Lula da Silva will be China´s growing interest in taking part of the bidding to build a high speed rail system between São Paulo and Rio de Janeiro. From the international summit on nuclear security, April 12/13, in Washington, President Hu Jintao will travel to Brazil. After the meeting, he will fly to Venezuela and Chile. Inspired by the Japanese model capable of running at 300km/h, Brazil wants to construct the bullet train rail connecting Rio to São Paulo. The bullet train speed will benefit the population of the two largest Brazilian metropolises. The bullet train project has a forecasted budget of US$ 9 billion.

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The question was put by Willian Mathis in a very interesting article posted in Brazzil.com. He says Brazil is possibly one of the globe’s most popular and successful nations, experiencing limited negative impact from the global economic crisis that ravaged Western economies, and having beaten out both Chicago and Tokyo for home field advantage in the 2016 Summer Olympics.

In another  quite revealing article by Sarah Lacy for Tecnocrunch.com,  she says Brazil is sort of a strange country to throw into the “emerging market” category. It’s not a particularly young country like India or Israel, nor is it a country like China or Russia that embraced capitalism fairly recently. Brazil is as old as the US and has had a decently built out infrastructure of things like roads and phone lines for some time.

Yes, it’s a growing country with a young and stabilizing democracy that has a long way to go in terms of technology, modernization and bridging a quality of life between very wealthy and very poor. In that sense, it shares enough in common with emerging markets that Wall Street, at least, tosses it in the “BRIC” bucket. Indeed, Wall Street has had a way bigger crush on Brazil to date than Silicon Valley.

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The Organization for Economic Cooperation and Development (OECD) chief, Angel Gurria, sent a strong warning to emerging countries during an interview with CNBC television, last Thursday: “There’s… a danger of asset bubbles in places like Brazil or places like India and we should be careful about that — that is a real threat”, he said. His words came as investors appeared to also start to realize the risk, pulling more than 500 million US dollars out of the Sao Paulo stock market in January. There are fears regarding China´s moves to tighten its economy and also of a speculative asset bubble, which are affecting equity prices and the National currency, the Real. There are also worries about European economies. Investors fear Europe’s woes may extend global slump.

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The heads of state of Brazil, Rússia, India and China will meet again on April 16^th, in Brasília, the Brazilian capital. They first met in the Russian city of Yekaterinburg last year to discuss the international financial crisis. The agenda for the April summit is still being discussed. The meeting comes as Brazil, Latin America’s largest economy, tries to take a more prominent role on the world stage. It has become an important member of the G20 group of nations – now a key forum for global economic and financial discussions. The BRIC group summit will be preceded on April 15th by a meeting of heads of states from Brazil, India and South Africa, also in Brasilia.

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Lots of investors are clamoring over China right now because stocks there have experienced phenomenal growth since January 1, 2009. There’s no mystery behind China’s appeal: The country has experienced robust economic growth even in the worst of the recession, including a nearly 9% annualized gain in GDP for the third-quarter that makes it one of the world’s fastest growing economies. There are certainly big opportunities in China, and I continue to recommend a number of Chinese stocks to individual investors. But a huge portion of those blowout gains have already been realized. Like it or not, the boat has sailed on many China stocks now that they’ve run up 200%, 300% or even 500% in a matter of months.

That’s why I want to let you in on a little secret: Brazil is the next China.

Brazil has all the signs of an emerging powerhouse. The nation’s currency, the real, has already gained 36% against the U.S. dollar so far this year on the strength of Brazil’s economy. And as of October, the three-month moving average for the inflow of foreign capital to Brazilian stocks was $5.19 billion, or an increase of 159%.

But it’s not just big-picture stats like that prompting me to think Brazil is the next big thing. It’s also little things.

Take the auto industry in Brazil, which is one of the strongest in the world. The industry employs 130,000 workers and produces more cars than all but five other countries. Experts forecast Brazilian auto sales will hit 3 million this year, which will represent an all-time record. And as a result, carmakers in Brazil are hiring more workers and expanding facilities even as the industry is on the decline elsewhere in the world. And all because of a growing middle class that is spending more on modern amenities like cars, computers and cell phones.

I am very bullish on Brazil right now—with a few stocks in particular at the top of my list.

First is the Latin American utility Enersis (ENI). As a growing middle class buys more gadgets and consumes more electricity, ENI will see booming growth. Consider that in the first quarter, Enersis’ earnings rose 50.5% to $257 million compared with the same quarter a year ago—even as the rest of the world was reeling from recession.

An even more powerful Brazilian utility is Ultrapar Participacoes (UGP). Utrapar and its subsidiaries distribute liquefied petroleum gas, refine and sell petroleum products and produce chemicals. In the second quarter, the company’s earnings rose 28% compared with the same quarter a year ago. What’s more, the analyst community is forecasting 61.9% earnings growth for 2010 compared with 2009.

These are just some of the breakout Brazilian stocks I am recommending to investors right now. Brazil is the next China, and you need to get in on the ground floor before these stocks skyrocket to record highs. If you were late on the China surge, you can’t afford to miss the Brazil blowout

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Brazil´s president, Lula da Silva, and the Chinese leader,Hu Jintao, hold hands in Beijing, earlier this year

By Sebastian Mallaby – The Washington Post

The country of the moment is Brazil, that melting pot of almost 200 million people. A thriving democracy, it has a hugely popular president and rapidly falling poverty. It recently won contests to host soccer’s World Cup and the 2016 Olympics. It is opening diplomatic missions all over the world. Its economy was one of the last into the financial crisis and one of the first to escape. And yet Brazil’s achievements are vulnerable. To keep its marvelous success on track, Brazil may have to do something that horrifies its diplomats: Confront China.

Brazil’s vulnerability comes from its currency, the real, which has jumped by a third against the dollar in the past year. A further rise could undermine exporters and make it impossible for domestic producers to compete with cheap imports, puncturing the vitality on which the Brazilian miracle is predicated. And a further rise seems all too possible. The forces driving up the real are not about to reverse themselves.

The first driver is the fragility of the U.S. economy, which causes the Fed to hold down interest rates, inducing capital to seek higher returns elsewhere. Brazil is a favorite destination: Its interest rates are high and financial conditions inspire confidence. Most forecasters expect the U.S. recovery to remain sluggish for the foreseeable future. So the logic of low U.S. interest rates probably won’t change, and the upward pressure on the real is likely to continue.

The second force driving up the real is China. If economic logic prevailed, the real would fall against the Chinese yuan: China has a vast current account surplus, while Brazil has a deficit. But last year China re-pegged its currency to the dollar, so the yuan has followed the dollar down, hammering Brazil’s ability to compete against Chinese producers. Meanwhile, the illogically weak yuan hurts producers in other countries, encouraging central banks to keep interest rates low and driving yet more capital into Brazil. This pressure from China is likely to grow along with China’s economy.

What can Brazil do about its rearing currency? It could cut interest rates to deter money from coming in, but Brazil’s economy is hot and lower rates would risk inflation. It could fight capital inflows with taxes — it has already experimented with this option — but such restrictions tend to leak like umbrellas made of icing. It could intervene in the foreign-exchange market, selling reals and buying dollars, but then scarce Brazilian savings would get tied up in the depreciating greenback. Or Brazil could protect its industry with tariffs. But protectionism could spark a cycle of retaliation.

The grim truth is that Brazil’s domestic tools aren’t powerful enough to stop its currency from threatening its success. So what about diplomacy? Asking the United States to raise its interest rates and take pressure off the real is a non-starter. With U.S. unemployment around 10 percent and an additional 7 percent of the U.S. workforce obliged to get by on part-time jobs, there is no way the Fed can raise interest rates to rescue Brazil from its predicament.

That leaves the option of talking to China. Unlike the Fed, China’s central bank has good reasons to raise interest rates and abandon its peg to the declining dollar. The peg is distorting the Chinese economy and causing the nation to amass dollar reserves that are destined to lose value. Admittedly, China’s political leaders have overruled the technocrats who would like to modify the exchange-rate peg, and they have ignored appeals from the United States and Europe. But the Chinese leadership might be more open to arguments from a successful emerging economy such as Brazil, especially if the Brazilians rounded up support from other middle-income members of the Group of 20.

Unfortunately, Brazil has no stomach for arguments with China. Its diplomats prize solidarity among the emerging “BRIC” nations (Brazil, Russia, India and China), even when that solidarity could threaten the growth on which Brazil’s BRIC status is premised. And for the moment, Brazil’s currency squeeze is not quite severe enough to scream for attention. The economy is expected to grow by a respectable 3.5 percent or so next year, and Brazil has done so well of late that it seemingly has no time to worry about problems.

On a recent Sunday in Sao Paulo, when Brazilians were reveling in the final day of the soccer season, a gang tunneled into the building of an armored-car company and blew open a safe, making off with nearly $6 million. Security guards heard the explosion but did nothing, assuming the noise came from soccer fans celebrating a goal with particularly tremendous fireworks. Perhaps there is a lesson here. Moments of rejoicing can be moments of trouble.

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