How the Bovespa stock exchange works: Ibovespa online quote chart and prospects for Brazil

The BOVESPA Stock Index (BVSP) is one of the main macroeconomic indicators of Latin America, traded on the Sao Paulo Stock Exchange. After the merger of the trading platform with the Brazilian Mercantile & Futures Exchange, the BOVESPA index became key for the region with a population of 60 million people. The index includes the blue chips of the 50 largest companies in Brazil, which includes only three financial companies in the financial sector and eight in the energy sector.

Among the “locomotives” are the defense and aerospace corporation Embrarer (a rare case of participation of a strategic company) and the Sao Paulo Stock Exchange itself, valued at 2.5 trillion. US dollars.

Types of index

The original Ibovespa includes shares of 50 companies. But there are other indices of “blue chips”, that is, the largest companies in the country: IBrX50 and IBrX100.

The Brazilian “family” also includes 5 industry and 5 highly specialized indices. The demand for analytical products of the exchange is not very large. Western colleagues have more indices. But there is still an indicator for every taste, even for depository receipts and real estate funds.

Cost and dynamics for all time

May 1971 - “Brazilian miracle”. Over three years, the index grew 12 times, inflating a terrible economic bubble. When it burst, the country experienced its first stock market crash in 80 years.

BVSP quotes provided by TradingView

The market recovered in the 1980s. It took 10 years because Brazil had a huge foreign debt and investors did not want to leave money here. The market is still recovering slowly today, and also suffers from speculation.

For example, Brazil hosted the 2014 FIFA World Cup. The index soared. And when the bubble burst, the stock exchange was in a fever for several more months.

Investing in Brazil

Brazilian stock market

In Brazil, of course, there is a fairly large stock market, the capitalization of which exceeds a trillion dollars - it is approximately twice as large as the Russian one in terms of the total value of companies. There are more public companies than in Russia, but it also cannot be said that there are many, just over 300.

The dynamics of the Brazilian stock market are similar to the Russian one - the local dollar index is highly correlated with the RTS index and is also far from the peaks in 2008 and 2011. However, unlike the Russian market, which in recent months has actually recovered to pre-coronavirus values, the Brazilian market is still significantly lower.

Investing directly in the Brazilian stock market is not easy - Interactive Brokers or other brokers available to Russian investors do not provide access to the country's stock market. Shares of individual large companies, in total there are a little more than 20. If you wish, you can consider individual issuers for investment, but purchasing shares of companies in an unfamiliar developing market always has increased risks. For most investors, buying an ETF is probably a better option if the Brazilian market is of interest.

Pros and cons of the index

The main disadvantage of the indicator is its speculative nature.

Brazil has a strong economy, but it is poorly regulated by the government. Unexpected growth and decline draws an angular graph that has nothing to do with the actual market situation.

On the other hand, this is a plus - such an index is suitable for short transactions. When a trader plays on the downside or upside, market instability plays into his favor.

But the average person is more comfortable in the calm waters of the Western stock exchange. Although the Brazilian index ETF is a reliable investment without risk.

How and where to make money on the index?

Ibovespa is the most reliable and profitable stock in Brazil. It would make sense to put them together in a portfolio, wouldn't it? If you simply copy the composition of the index in your portfolio, it will repeat the profitability of Ibovespa and will never let you down.

And the easiest way to collect all the shares is to contact an ETF fund. Of course, you can make 50 trades yourself and update the portfolio every quarter. But why? The fund manager will do everything for you.

It buys shares from the index with investors' money and pays them dividends. ETFs can be bought and sold like regular stocks. But at the same time, you don’t have to bother with taxes and the status of a professional investor!

By the way, you can buy such an ETF or its analogue through a foreign broker or a subsidiary of a Russian investment company.

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Caution (about Forex and binary options)

Only a patient and competent investor achieves passive income. Don't believe advertising that promises quick money.

Especially if it is an advertisement for Binary Options and the Forex market.

Binary options exist in reality, but they are traded by millionaires and large funds. They cannot be bought online! What the scammers are offering is entirely virtual reality, which is designed to rob you.

But the Forex market is already real. True, it’s still easier to win at a casino. And there are scammers in this niche too.

Remember: neither one nor the other has anything to do with real stock exchanges!

What affects the price?

Useful articles

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What is investment portfolio diversification and why is it so important?

How to choose the right instruments and fill a passive investment portfolio?

The country's economy was last hit by lower iron ore prices. The commodity race, as fluctuations in metal prices are called, always harms indices.

Bovespa is no exception. But now there is a more serious threat. Presidential elections are taking place in Brazil, and it is impossible to predict the reaction of investors to the new head of state.

Telephone codes for cities in Brazil.

Telephone codes of settlements, cities, municipalities of the Federative Republic of Brazil. To find the required value in the table, use the search.

Other codes:

Bosnia and Herzegovina,

countries of the world,

Great Britain.

Forecast, analytics and prospects

Russians often complain that salaries are low and prices are high. This phenomenon is called the “Brazilian price”.

This is not a very good characteristic for the national economy. In defense of Brazil, I will say that the market here is the most promising in hungry Latin America. Foreigners trade depositary receipts here, there are futures and options, and investor funds come in.

Even the numbers are on my side: Brazil ranks third among agricultural exporters, with GDP growing by 1.2% in 2017.

Features and Benefits of Bovespa

Advantages of the BOVESPA index is tied to the real sector; easily pumped up with speculative money; has a participant in the aerospace sector; characterized by moderate volatility; is the only stock index in Latin America; Features of the BOVESPA index The total capitalization of participants exceeds 2 trillion. US dollars, according to this indicator, the index, being linked to the exchange of the same name, is the eighth in the world and the first in Latin America. Every year or every few years, the founder of the index reduces its quotation (relative to the original indicator) by several units. This makes the index cheaper and less attractive to speculators.

Dependencies are extremely speculative, although Brazil's economy is powerful; depends on the monetary policy of the USA and Asia; the regulator is forced to limit the index quote; characterized by powerful unmotivated falls; market recovery takes years; Interesting to know There are several specific requirements for index participants. Thus, entry into the TOP 50 must be preceded by work on the stock exchange for one year. At least 80% of the total capitalization must be in free circulation, while the volume of traded shares must exceed barter transactions of at least 0.1%.

To participate in BOVESPA, it is also necessary that the securities account for 4/5 of the shares in other indices.