South America: The next big growth
4-01-2008: With the U.S economy is in the tank, where can one look to invest? Some would suggest the usual suspects such as China or India, but these two countries appear to be tapped out. Don’t get us wrong, there are still plenty of opportunities, but you won’t find the same level of return. Instead of only looking at the Far East, our research suggests South America could be the next area of growth. We have narrowed it down to Brazil.
We’ll spare everyone the boring details as to why Brazil is out choice. However, there are several main reasons we would like to point out. The first is energy independence. Brazil is what America is trying to become in terms of energy independence. While Brazil import some of its crude oil, the country is mainly self sufficient in producing its own fuel. Thanks to the rich crops of sugar canes, Brazil is one of the main producers of Ethanol. While we Americans are paying almost $4 per gallon for our gasoline, Brazilians are paying only a fraction. In our view, any country that doesn’t have to depend on the Middle-East for its fuel will always have a slight advantage.
Another clear advantage we see with Brazil is its vast natural resources. Specifically, Brazil is rich in ores and other natural resources. Minerals that can be forge into building materials will make it easier for the country to develop and grow. In our view, these natural resources have yet to be tapped.
The final reason we like Brazil is political stability. While the country does have issues, Brazil has been able to consistently grow its economy due in part to political stability. The government and its people are also receptive to foreign investment. This makes it easier to establish a business and prosper.
Investing in foreign markets is obviously very risky and could either make you a lot of money or can result in huge negative return, but the next time you’re thinking about where to put your investments, we suggest looking beyond the usual suspects as we believed Brazil is on the rise.
