It’s time for Brazil, after last Sunday’s election victory of Luiz Inácio Lula da Silva – “Lula” – the socialist presidential candidate.
The country will take advantage of the two main driving themes of the world economy over the next two decades: the transition of power and the growth of the world population.
What excites me is the country’s thriving export sector.
Simply put, Brazil produces what the world needs. And as our world turns upside down through the energy transition and population growth, demand for Brazilian products will skyrocket.
The world cannot fight climate replacement without Brazil. As pressure mounts to curb global warming, more money will flow into the country. Its main asset is the Amazon rainforest, which is home to more biodiversity than anywhere else on the planet. A healthy Amazon rainforest would act as the lungs of the planet, absorbing massive amounts of CO2 and releasing entirely new oxygen.
Under Bolsonaro, deforestation has increased, leading some scientists to worry that fires in the rainforest are releasing more CO2 than it could capture. Lula had a proven record of fighting deforestation when he was the last president, and foreign donors such as Norway have already announced plans to resume investment projects in the Amazon.
Brazil’s next global climate replacement resource is its mining industry. This would possibly seem to contradict the previous paragraph, however, iron ore and nickel from Brazil are for the energy transition. Brazil has the fourth-largest reserves of nickel in the world, a steel used in electricity. vehicle batteries (EVs).
Currently, nickel’s primary use is stainless metal, as its addition to the aggregate helps make the metal more resistant to excessive temperatures and corrosion, while batteries account for 6% of total nickel demand. But the monetary knowledge organization S
Brazil is well established as an agricultural superpower; The country’s food production supplies 10% of the world’s population. It is the world’s largest exporter of beef, soy, sugar and coffee. It is also very close to the most sensitive in corn, cotton and pork. By measure, agribusiness now accounts for 25% of Brazil’s economy.
The U. S. Census Bureau The U. S. estimates that the world’s population will reach 8 billion by mid-November 2022. This will increase to about ten billion by 2050 and 11. 2 billion by 2100. to climate replace affected agriculture.
Of course, Brazil is the only breadbasket in the world, but recent conflicts have shown it to be one of the most reliable.
A dynamic applies to energy. Brazil is Latin America’s largest oil producer and production has risen to 3 million barrels per day, up from two million in 2012. Consulting firm McKinsey estimates it could succeed at about 4 million barrels a day by 2035.
Brazilian biofuel production is related to energy and food. Brazil is the world’s largest biofuel manufacturer and customer. This led to the sugar industry in the 1970s, but today fashionable biofuels can use a much wider diversity of feedstocks, such as tea, dead animals and used vegetable oil. As generation improves, Brazil will be able to extract more and more value from its agricultural tea.
Despite the country’s development success, its inventory market still looks attractive with a price-earnings (p/e) ratio of just seven to an average of ten for the MSCI Emerging Markets. This is one of the most compelling reasons to invest in Brazil.
Brazil’s national oil company, Petrobras (NYSE: PBR), has made record profits by selling ancillary businesses and focusing on oil and fuel production in recent years. Most likely, Lula will pressure the company to invest in more blank electricity companies, which will be less profitable.
However, other oil majors, such as BP and Shell, have already invested a larger percentage of their profits in renewable energy projects with less market reaction.
Petrobras has ten billion barrels of reserves and will most likely carry more in the coming years as it continues to exploit its pre-salt discoveries.
Petrobras is incredibly cheap and trades at a price-to-earnings (p/e) ratio of just 2. 8, compared to Shell and BP’s five. You will also pay a mega dividend yield of about 50%.
Agriculture accounts for about 27% of Brazil’s GDP, but agribusiness inventories account for 4% of the local inventory market. Luckily, there are some features that are listed in the US. In the U. S. we can invest. Adecoagro (NYSE: AGRO) is a South American agricultural giant whose offerings arrive with rice, wheat, corn and dairy products in Argentina, Uruguay and Brazil.
However, the largest part of the business is its sugar and ethanol business in Brazil, which accounts for 50% of sales and 70% of earnings before interest, taxes, depreciation and amortization (Ebitda). Its production of biofuels makes it a vital component of renewable energy. energy history, while its food production is for a developing world population.
Another option is BrasilAgro (NYSE: LND), which produces beef, cotton, soy, sugar, ethanol and corn in Brazil, Bolivia and Paraguay. More than 80% of its land is in Brazil and soy makes up most of its production. With a p/e ratio of 4. 5, the company is reasonable to buy into the global long-term food trend.
If you don’t like the threat of investing in individual stocks, the cheapest way to invest in Brazil is to use an exchange-traded fund (ETF).
With a general expense ratio (TER) of 0. 74%, the iShares MSCI Brazil Ucits ETF (LSE: IBZL) offers cheap exposure to a diversified basket of Brazilian stocks.
If you prefer an actively controlled Brazilian fund, there are several available to UK investors. One of them is HSBC Brazil Equity, which has an overall expense ratio of 1. 28% per annum.
Be sure to pick up your tickets for the MoneyWeek Wealth Summit hosted by Merryn Somerset Webb on November 25, 2022! We have brilliant speakers covered, and given everything that’s going on, we’re going to have a lot to discuss. .
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