Download RoI in Brazil, Europe and North America.key

Coffee Break
Return on Investment in Brazil, Europe
and North America
2nd. quarter 2014
Writer
Frank P. Neuhaus
Founder and director
iManagementBrazil Ltda.
São Paulo, Rio de Janeiro - Brazil
Photos & Illustrations
iManagementBrazil Ltda.
Shutterstock, 2014
iStudioBrazil, Brazil
SWOT Analysis Brazil 1st. quarter 2014
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STRENGTH
- commodity and agricultural wealth
- additional agribusiness areas ready to use
- flexibility on foreign trade
- institutional stability
- organized and rigid capital market environment
- net creditor to the world
- one of the most solid banking systems of the world
- strong internal market
- highly consumption orientated
- solid investment environment
- strong national industry presence
- stable democracy
- no terrorism threat
- no war threat
- service orientated
- one of the most creative cultures on Earth
- very young and enthusiastic population
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Opportunities
- strong demand for agricultural and mining commodities on world
markets
- strong investments in off-shore industry and new deep water oil
fields
- strong direct investments in commodity operations
- strong investments in infrastructure
- strong growth of construction sector
- Olympic Games in 2016 (Rio de Janeiro)
- feasible export markets for ethanol
- very high „green consciousness“
- devaluation of Brazilian Real makes national assets very competitive
for take overs
Weakness
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- traffic chaos in urban areas (SP, RJ)
- congested maritim ports
- mainly overland truck transport
- complex tax system
- elevated crime rate
- lack of qualified people and workforce (blue & white collar)
- corruption threat
- low productivity
- bureaucracy
- slow juridical system
- education system with tendency to social separation
- housing shortage
- insufficient conditioning for tap water
- Presidential elections in the last quarter of 2014 paralyze the economy in
several sectors
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Threats
- credit shortage due to high interest rates
- low demand on global markets for several national products
- low commodity prices
- dependency on hydro energy
- debts rate of private households
- volatile exchange rate
- garbage and water problems
- logistic black-out
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Invest for Growth
Conclusion
10,0
!
China
Despite numerous generalizing assumptions that
investments in Brazil are highly risky, the facts show
that with relatively low investments in relation to the
BIP of the country, significant growth rates are
achieved. But if the results are compared with other
emerging markets, Brazil ranks very low. During the
past decades only South Korea achieved significant
growth rates, leaving behind the status of an emerging
market country.
India
Growth rate of BIP in percentage
7,5
Turkey
Indonesia
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Russia
Comparing the leverage effect of investments in
relation to the BIP vs. countries growth rate, Brazil
outpaces almost all developed countries. The
developed countries, in particular European nations,
have to invest a huge amount of the BIP in order to
keep a feasible growth rate. The Brazilian trend
remains positive, but the investment in relation to the
BIP has to be accelerated. After a period of
productivity growth due to incorporation of emerging
social classes in Brazil, the next years will present
significant structure changes and new business
opportunities for investors in Brazil. The highest risk
is for those with no investments in the Brazilian
market.
5,0
South Korea
Brazil
Mexico
Australia
2,5
USA
France
Japan
Germany
0,0
related to a study of Deloitte, 2012
0,0
10,0
20,0
30,0
40,0
Percentage of Investment in relation to the BIP of the country
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Investments in Brazil performing much
better than in North America or Europe.
RoI with take over, majority and minority participations of foreign investors in Brazil (in % per year)
50,00
45,00
40,00
35,00
30,00
Brazil
Trend Brazil
North America
Trend North America
Europe
Trend Europe
25,00
20,00
15,00
10,00
5,00
0,00
-5,00
1990
1995
From 1990 to 2012,
investments in Brazil
registered an annual
average RoI of
25.24%.
2000
2001
2002
During the same
period, investments in
North America did
not exceed an annual
average RoI of 9.94%.
2003
2004
2005
Even worse,
investments in
Europe registered an
annual average RoI of
2.21%, which is below
the inflation rate.
2006
2007
2009
2010
2011
2012
Conclusion
Despite a lot of folkloric assumptions that
investments in Brazil might run a huge risk, the facts
show that a mid and long term investor will realize
significant RoI. The Brazilian trend remains positive,
mainly due to the young population, the changed
social pyramid, the installed industrial base and the
significant natural resources. The highest risk is for
those with no investments in the Brazilian market.
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We act nation-wide.
Contact Details
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!@mail: [email protected]
!www.imanagementbrazil.com.br
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