Bye, bye, Brazil: Residents take US$1.5 billion per month out of the country

RIO DE JANEIRO, BRAZIL – Brazilians have made more investments abroad in the last five years than in 515 years of history. The stock of resources outside the country is currently around US$45 billion, compared to US$25 billion in 2015. The years of Dilma Roussef’s reelection and impeachment were the first leaps after centuries of stagnation at around US$15 billion.

The calculations are from Marcelo Giufrida, from Garde Asset Management, which has R$4.5 billion (US$803 million) under management. The current exchange rate – with the dollar frequently oscillating above R$ 5.50 – has not inhibited investors from taking money out of Brazil. The average of January and February 2021 shows that monthly investments of US$1.5 billion were made abroad.

The volume is about 50% higher than the monthly US$1 billion invested throughout 2020.

“It’s still a very, very small portion of the total savings of Brazilians, which is around US$3 trillion, considering public bonds, banks, shares, savings, private equity, etc.”, comments Giufrida, in an interview with EXAME IN.

Garde’s partner was manager for almost 15 years of the Paribas fund, which had under management a little more than US$ 1 trillion.

The products that make it easier and even more interesting to invest outside the country are constantly emerging. This movement’s strength becomes evident when a company like Dynamo, one of the most traditional and respected asset managers in Brazil, launches a global product.

The fund will be open to qualified investors (with more than R$1million in liquid assets), with a minimum initial investment of R$25,000. The national portfolios of the Rio de Janeiro-based asset manager traditionally only raise funds from professional investors, those with assets of more than R$10 million.

Morgan Stanley offers a global fund with a minimum contribution of R$500. The paths are everywhere. The digital bank C6 Bank recently launched an account where the client can move funds in Brazil and abroad.

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The scenario, in Giufrida’s view, is positive. He points out that it is an important diversification for the investor. “And there is no way to ask people not to be influenced by the returns from the recent past. It’s five years of high dollar exchange rates in a row. Besides the foreign exchange gain, the appreciation of assets has made a lot of people happy.”

However, Giufrida also sees reasons to be alert in this scenario. It has never been this easy to invest outside Brazil. Until recently, taking money out of the country was frowned upon and often seen as a sign of concern about the resources’ origin. “Now, it’s chic.”

“The channels and conduits are all working and well lubricated.” If the domestic scenario worsens, there could be a disorderly outflow of resources from Brazil, which would bring major consequences. For him, the risk of this occurring is no longer so insignificant with the deterioration in the political and economic scenario.

“Time goes by, and we see that promises of respecting the budget ceiling and approving reforms are only promises.”

The investments made by Brazilians in the foreign market, so far, have not influenced the exchange rate. “That’s not what is behind the dollar at its current level,” Giufrida explains that this movement, however, is strongly related to the behavior of companies with their cash.

“Today, many large companies leave an important part of their cash outside of Brazil. For exporters or internationalized companies like Vale and Petrobras, it makes a lot of sense. But there are also many others with part of the funds there because of the tax advantage. While financial expenses reduce taxation on results, with a rate of 34%, investing outside the country is taxed at only 20%. There is an arbitrage space”, emphasizes Giugrida.

“But you can’t forget that you have a pool of R$15 trillion in domestic savings. If that moves beyond diversification, there will be a problem.”

Asked if there is an adequate percentage, the specialist explains that there is no number because it varies according to each country’s reality.

Source: Exame