Brazilian Domestic Demand Provides New Avenue for Investment, According to BNY Mellon ARX Investimentos

BNY Mellon Asset Management Boutique Focusing on Rising Middle Class

News provided by

Sep 30, 2010, 07:39 ET

LONDON and NEW YORK, Sept. 30 /PRNewswire-FirstCall/ -- Investors in Brazil are likely to benefit more from companies linked to domestic demand instead of commodities, which were the main drivers of the country's economic expansion until now, according to BNY Mellon ARX Investimentos, the Brazilian investment specialist for BNY Mellon Asset Management.

A recent white paper published by BNY Mellon ARX forecasts strong growth in domestic demand, and makes particular note of companies in the food and financial services sectors. The growing consumption is being powered by rising standards of living, positive demographic conditions and improved social mobility, the paper notes.

In addition, Brazilian consumers are not burdened by excessive debt and have the capability of borrowing more, which contrasts with consumers in developed world countries.

The BNY Mellon ARX paper concludes that Brazil has the potential to achieve gross domestic product (GDP) growth of approximately 5.5 percent annually in real terms. So far this year, GDP is increasing at an annual rate of 7.5 percent, slightly above trend.

"Brazilian commodities companies have long drawn the attention of investors around the world because of their success in exporting to companies in China and other highly industrialized economies," said Jose Tovar, managing director of BNY Mellon ARX. "However, Brazilian GDP growth and internal expansion lead us to believe that Brazilian companies focusing on domestic demand will provide greater opportunities to investors.

"We also expect the hosting of the World Cup in 2014 and Olympics in 2016 will boost the development of Brazil's infrastructure," said Tovar. "As Brazil invests more in infrastructure, including roads, bridges and the education of its youthful population, we believe it will be able to further increase the growth rate of its GDP beyond five percent annually, which already is almost double the rate Brazil has grown over the last two decades."

Notes to Editors:

BNY Mellon ARX Investimentos, focused on asset management in Brazil, manages US$6.2 billion in active management in hedge, equity and fixed income strategies, with a diversified client base including high net worth, corporations, endowments and foundations.

BNY Mellon Asset Management is the umbrella organization for BNY Mellon's affiliated investment management firms and global distribution companies.

BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $21.8 trillion in assets under custody and administration and $1.0 trillion in assets under management, services $11.6 trillion in outstanding debt and processes global payments averaging $1.5 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available at www.bnymellon.com.

SOURCE BNY Mellon