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M Cardoso of Titulo explains how a local company sees investment opportunities in Latin America

What are the prospects for international investors in South America, particularly in Brazil?

South America spent several years with its doors shut, economically and politically, in comparison with other countries. With the continent opening up politically through the spread of democracy, and with the strengthening of the economy, South America is now appearing as an underexplored market with high demand.

The domestic savings are not sufficient for the heavy investment that is essential for the development of infrastructure. Domestic savings need to be complemented by external investments. South America is well placed to attract such foreign investment, now that it is showing political stability and more modern markets with fixed rules.

With an economy and territory representing approximately half of the region, Brazil plays an important part. A great privatisation programme is happening at the moment, giving investors great financial leverage.

Is the stock exchange of Sao Paulo prepared to receive international investors?

No doubt about it. Bovespa has assets of approximately R$500,000,000 as a guarantee; with a possibility of having financial settlement put through banks at the investor's choice, as well as the custody of the securities. Furthermore, Bovespa acted in conjunction with the governmental authorities, to provide flexibility to international investments. At the moment, Bovespa is about to install a modern trading system of securities, besides an independent clearing house that will bring more credibility to the Brazilian capital market.

What are the advantages of trading through a local firm instead of a foreign bank? And how is your company preparing for globalisation in capital markets?

To start with, a local broker is quicker at making decisions through out the trading period and at communicating internally between the various areas of its structures - research, back office, and so on, than a bank. As opposed to banks and other financial institutions that also offer brokerage services, we are not risk takers. A local broker's success depends exclusively on quality of service it gives to its clients. A client is like a product in a production line that has to be carefully accompanied from the moment a contract is signed, until the settlement of each transaction. Another factor that differs between local firms and foreign institutions is their knowledge of the local market and its participants (local investors such as funds, insurance companies, pension funds) and other facts that may have daily effects. Local companies compete by striving to ensure that investors benefit from their knowledge of the local market and its products.

Which are, in your opinion, the sectors with the highest growth potential in Brazil?

The sectors with more potential and which should attract the attention of investors for the next few years are telecommunications and energy. Other sectors, such as transport and sanitation, are just starting to attract investors' attention.

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