The Bovespa is now up 60% for the year -

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I've had a limit order to buy Market Vectors Brazil Small Cap (BRF) [Jun 2, 2009: Market Vectors Brazil Small Cap (BRF) - a New ETF for Exposure to Brazil] for a good 6 weeks now but my price of $31 looks silly at this point, although we missed it by a dollar about a month ago.

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So for now our only Brazilian exposure remains homebuilder Gafisa (GFA). Some more news on that end from the macro standpoint via Bloomberg. Especially in light of what we wrote in a piece earlier this week.

The company’s revenue from low-income housing may increase to as much as 60 percent next year from the current 50 percent, he said.

Bloomberg:

  • Brazilian President Luiz Inacio Lula da Silva may reach the target of building 1 million homes for low-income workers by 2011, when his term ends, said the chief executive officer of homebuilder Construtora Tenda SA.
  • “The beauty of the government program is that for the first time it has set a goal,” Carlos Trostli said in an interview in New York. “It will be very difficult for someone to come and stop a program that’s generating jobs and increasing fiscal revenue.”
  • Lula announced a plan on March 24 to spend 34 billion reais ($18.8 billion) for low-income housing, a business that accounts for more than two-thirds of Tenda’s sales. Brazil will hold presidential elections in October 2010.
  • Low-income housing represented 88 percent of Tenda’s revenue in the first half, Trostli said. Shares of Brazilian homebuilders such as Gafisa SA, which owns 60 percent of Tenda, have more than doubled this year as policy makers cut interest rates to a record low and the government unveiled a 34 billion- real housing stimulus plan.
  • “With the crisis of liquidity we had to reduce the rhythm, but now we are accelerating our developments in order to deliver the units we sold,” Trostli said.

It's funny - the Brazilian socialists don't sound very different from the American capitalists; in fact government run housing institutions dominate the US housing landscape to a greater degree than the Brazilian equivalent. Dogma is funny like that. Truth in advertising seems to be a lost art in the States; or perhaps its just the denial syndrome regarding the label of what we are running here.

  • Caixa Economica Federal, Brazil’s state-run mortgage lender, which controls 72 percent of the Brazilian mortgage market, plans to finance a total of 400,000 housing units in 2009 and “at least” 400,000 in 2010, Chief Executive Officer Maria Fernanda Ramos Coelho said yesterday

Long Gafisa in fund, no personal position

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