 Good day fellow investors! Today I'll discuss one of my favorite emerging markets, Brazil. I have been following Brazil for more than a few years now and there are very interesting developments going on that could lead to extremely positive future returns. So I'll discuss the economics, I'll discuss a few investing options and I'll make another two videos about two stocks that I really find interesting in Brazil at this moment. So please subscribe. The first thing I want to show you is that the Brazilian economic activity has started to turn around and we have seen 1% growth in the economy in the first quarter. Okay, 1% growth is not bad but why do I think really Brazil has the potential to do much more? What's very important is the balance of trade. The balance of trade shows you how much is the country exporting and how much it is importing. As you can see here Brazil has hugely positive exports. This means that more money is coming in and therefore the country will continue to grow, will receive benefits from exports and it's a very very positive strength sign for an economy. The country will get richer and richer in the future. Now what has been the issue in Brazil in the last few years? A very difficult political situation with the impeachment of the president. The current president is also accused of corruption so the political environment hasn't been of the best ones. However, the economics are getting much better despite of what's going on in the politics. We can see here inflation is falling, has been trimmed, now is around 3%. Which is an excellent result because 3% is a very good inflation rate and gives stability to the currency and gives stability to future investments. What's also very important is that economic growth was very negative in the past two years. The recession was deep with declines of 3.8% in 2015, 3.4% in 2016 and now the World Bank and the International Monetary Fund expect the economy to grow around 2% in 2018 and then for the long term. So the reversal that turned around is what can really give wings to Brazilian investments. So when an economy is really in a bad state and then turns around that's a great trend to be invested in and what's going on in Brazil with a positive balance of trade with commodities recovering a bit with inflation stabilizing the trend can be very strong and very very positive. So we have a good country, stable country, huge country, rich country that's getting richer and one of the most important benefits that is often overlooked by investors is the currency risk positive or negative when investing abroad. If we take a look at the Brazilian real versus the dollar we can see how it really depreciated in the last few years during the crisis and now it is around 3.3 Brazilian reais per dollar. When the economy will strengthen and that will be seen only in the next two years not immediately it's very probable that due to the exports and positive balance of trade the Brazilian currency strengthens and let's say that it drops down from the current 3.3 to around 2.5 Brazilian reais per dollar. So if the currency appreciates by 30 percent your investment even if nothing happens in your domestic currency goes up 30 percent. So for international diversification currencies are very very important and the best way to diversify internationally is to invest in countries when their currency is relatively cheap like it is in Brazil now lower inflation the economies just started to turn when the economy will be roaring at 2 percent then the currency will already be strong and then it's not a good time to invest in Brazil now it's a much better time to invest in Brazil especially US investors have to think about international diversification because here there is a long-term trend cyclicality of the dollar when the dollar is strong the economy isn't doing that well so we can see that the strong dollar doesn't last long and the trend is for the dollar to get weaker so that the economy can do better. 2011 the dollar was weaker now it's again strong there is a high probability that the dollar will continue with its cyclicality and get weaker in the future especially if there is a recession in the next few years and the Fed lowers interest rates again. So if you're a US investor you should look to diversify internationally now because your currency is strong in comparison to other currencies when the trend reverses your international investments will get a huge bonus from currency changes so think about that. All right now let's see what do we have on the Brazilian stock market I have analyzed companies that are traded on the New York Stock Exchange I find them very easy to analyze and they give lots of transparency so that's very important. Now we can see very different price earnings ratios going from 30 to just 5 the dividends yields go up to 5% and there are also companies that don't pay dividends so Ambev, Tsemic, CPFL, Embraer, Telefonica Brasil, Tim, ULTRAPAR are all relatively fairly priced however there are companies like ElectroBrush, Copeo, Sebast, Vale and some banks that have really low price earnings ratios below 10 so giving that the economy is recovering we don't know when will the international market recognize Brazil as a gem again so we want a low price earnings ratio and a good dividend to reward you while you wait and if there is a currency change then the dividend even if it's the same in Brazilian reals will be just higher and higher for you the Brazilian market is still very cheap check the Brazilian ETF it's 77% below its 2007 peak and 60% below its 2010 peak as the economic recovery is not yet recognized by the market the market is usually very slow when things get going when the growth is confirmed in Brazil the stock prices should also increase accordingly and I wouldn't be surprised if the Brazilian ETF hits the peaks reached in 2010 and 2007 so the problem or opportunity however do you see it is in the fact that the market hasn't yet warmed to Brazil because they are still thinking about the political issues high inflation that has been but things have changed so you can see the ETF is still low so the market didn't recognize that so now it's a good time to invest to catch the upward trend however I wouldn't invest in an ETF because ETFs invest by looking just at market capitalization and if we look at what the Brazilian ETF highly skewed towards financials the fairly priced consumer staple petrobras energy so really if you want to invest it would be much better to find few stocks three four stocks or two three that are a good match to your portfolio and I'll be discussing a few of them so be sure to subscribe as a video about some utilities and some real estate companies will come up soon Brazil economic recovery cheap stocks low valuations high dividends positive balance of trade huge rich country what do you want more thank you for watching be sure to subscribe click like comment share your thoughts if someone from Brazil has an interesting idea please write it down and I look forward to seeing you in the next video