(2.)  Brazil: A Case Study in Latin American Growth

Now that you have read a broad overview of the case for investing in Latin American stocks, let's take a closer look at one country as a case study: Brazil.

You just got a taste of Brazil's attractiveness with respect to its strong currency. However, there is much more to this investment hotspot. Latin America's largest country and economy is blessed with a diversified industrial base and a wealth of natural resources. Until the last five years, its economic history was rife with instability, high inflation and interest rates, and poor government policies.

However, Brazil has recently gotten its act together. Interest rates have come way down over the past five years, in part because the national government no longer runs huge budget deficits. This is thanks to disciplined spending policies, tax reforms and rising commodity prices, which have been a boon both to economic growth and the government's tax revenues.

These factors have helped Brazil's economy grow significantly in recent years. Its gross domestic product (GDP) now exceeds US$1 trillion, ranking Brazil as the world's tenth-largest economy, according to the World Bank. Best of all, this growth has come while inflation has declined substantially. After peaking at about +12.5% in 2002, inflation has steadily declined since then, dropping to a very manageable +4-5% range.

Brazil has thrived thanks in large part to strong industrial, agricultural and mining sectors -- all of which contribute to a diversified export economy. About 16% of exports go to the U.S., about 9% to Argentina, 7% to China and another 4.5% to Germany. Exports have risen by about +15% per year over the past five years.

Brazil's industrial sector includes the fairly low-cost production of cars, steel, airplanes and chemicals. Blessed with some of the world's most fertile soil, Brazil is a major producer of foodstuffs that are seeing rising demand, including soybeans. Its ample natural resources include significant deposits of iron and manganese, major offshore oil reserves, and of course the Amazon rainforest -- whose exploitation is criticized by environmentalists, but is a boon to the Brazilian economy.

Ironically, in other areas Brazil has been at the forefront of environmentally friendly economic planning. The country has a growing reputation for top-notch scientific and technological innovation, particularly in the areas of agribusiness and energy: Brazil has developed new, "greener" strains of cattle and is a world leader in ethanol research and production. It also harnesses its many rivers to produce about 90% of its electricity with clean hydroelectric power.

Brazil also has fast-growing services industries, in particular its banking and telecom sectors.

Most economists think Brazil's economy can grow at a stable +4-5% rate in the coming years, almost double the expected growth for the U.S. economy. Note that Brazil does face a huge problem that could put a strain on its economy in the coming years: the majority of the population is extremely poor, and as the country's overall wealth grows, political pressure to alleviate poverty is likely to increase as well. But if the stable economic growth continues, the country's stock market should continue to perform well, and the government will likely spend more on anti-poverty measures.

Brazil is just the largest example of the trend happening throughout Latin America. And the economic boom is also carrying over into the Spanish-speaking Caribbean, including Puerto Rico. The region's second-largest economy -- Mexico -- has seen a dramatic rise in its middle class. Put it all together, and the long-term trend is clear: Latin America is a great opportunity for foreign investors.

(3.)  Happy Hunting for High Yields

END OF FREE CONTENT

The remainder of this report is available exclusively to paid subscribers. In it, we provide in-depth analysis of three securities with strong income potential, thanks to economic growth in Latin America. These include:

  A telecom provider that is benefiting from the emergence of Brazil. As the dominant telecom in the country's largest city, this firm is able to shower investors with an 15.0% yield.

  A Latin American pension provider -- this firm is as stable as they come, and sports a 8.5% yield. And if the dollar continues to fall over the long haul, your dividends are boosted even more.

  This Brazilian utility is one of the largest companies in South America. With most of its power coming from hydroelectricity, this company is steadily growing profits and hedging itself against oil and gas prices. Best of all, the stock yields 8.5%.

Thanks for reading today's special report -- Heading South for Higher Yields.

Good investing!

-- Research Staff
StreetAuthority.com
http://www.StreetAuthority.com

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