Business Environment: Stock Market Strength

October 2006 | Risk Summary

Despite the political uncertainty resulting from the presidential election, the Brazilian economy remains fundamentally strong, which is a positive for its business environment. One barometer of the solid environment is the Bovespa stock index. Despite having weakened during the emerging market sell-off in May, the Bovespa has bounced back, and may be headed towards its all-time high of 42,061.59. Although the recent performance of the Bovespa has been helped by the rally in the US Dow Jones stock index, Brazil's unprecedented macroeconomic stability is the key driving force behind investor confidence in Brazilian stocks. Inflation, which is set to come

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