This week, the Wall Street Journal reported that the Brazilian government has now imposed a two percent tax on foreign investment entering Brazil, hurting the local stock markets.<\/p>\n
Brazil has weathered the global economic crisis much better than other countries, and the Ibovespa index rose 70% since March. The government has imposed tax on stock market purchases before, at 1.5% in 2008. The move this October is due to the strong real, which is hurting Brazilian exports.<\/p>\n
However, experts say the move is already been detrimental to Brazilian stock markets and small and medium-sized companies looking to get onto the market in Brazil. They also say the move could threaten Brazil’s relatively new investment-grade status.<\/p>\n
But like things in Brazil sometimes go, it seems investors may have already discovered a jeitinho to get around the tax. Investors looking to buy equities in Brazil could buy the equivalent stock in New York, cancel the purchase, and as a result get the equivalent Brazilian stock.<\/p>\n