Bridging the Atlantic: Will internationalisation of portfolios continue?
Change is an omnipresent fact of life in business. Enterprises must continually change and adjust product and marketing strategies to meet evolving customer needs. A business not attuned to change, risks the loss of substantial market share. As Winston Churchill once said, “To improve is to change. And, to be perfect is to change often.”
Since our first “Bridging the Atlantic” forum in 2012, Brazil has changed significantly. Then, the country’s GNP was advancing at 7.5% year-on-year, and inflation was close to the target rate of 4.5%, and interest rates were in single digits.
Now, Brazil is in a very different environment rate- and inflation-wise, but the country is also more globalized than ever. Local investors have markedly internationalized their portfolios to a level of $70 billion, up by one-third over the last three years. Investors are seeking to diversify from local exposures and rates of return. According to CVM projections and deregulation, diversification should continue into the future.
The question for investors today, particularly those who are conservative, or with actuarial targets of inflation plus 5% --- with local fixed income rates over 14% --- will the internationalization of portfolios continue at the current pace?