In 2001 Goldman Sachs Investment Research Division coined the term “BRIC’s” in their now famous research report that predicted that Emerging Market economies, led by Brazil, Russia, India and China (BRIC’s) will grow faster than Developed economies between 2000 to 2009. During this time frame, BRIC nations became the investment focus of Institutional Investors around the world seeking higher returns and an alternative to traditional markets.
Fast forward to 2024 and the landscape for investing in the BRIC countries has dramatically changed. Enthusiasm for investing in China has tempered due to a deteriorating economic outlook and increasing government intervention. Russia, due to their invasion of Ukraine, is under sanctions leaving the market off limits for investors. These circumstances have steered investment away from these two BRIC countries, leaving Brazil and India in the spotlight for investors looking for opportunities beyond developed markets.
As the global investment landscape gradually changes, Brazil has attracted some positive headlines. Moody’s recently increased Brazil’s Credit rating to positive from stable, citing “the implementation of structural reforms that have shored up growth prospects in Latin America’s largest economy”[1]. Moody’s is the third credit agency since June 2023 to upgrade Brazil’s credit rating. These reforms have set the stage to attract long term investment into Brazil’s emerging companies that have aspirations to reach global markets.
Brazil’s Technology sector has been overshadowed by other larger countries such as the United States and China. Brazil currently has 20 Technology Unicorns and the possibilities of more are increasing[2]. According to Sling Hub, in the first quarter of 2024, Investment in Brazil’s Startup industry was $721 Million USD, which represents a 38% increase from the first quarter of 2023[3]. Brazil’s largest Unicorn by Market Cap and Latin America’s Largest Financial Technology company, Nu Bank has grown to over 90 Million users across the region. Their rapid growth has translated to an increase in revenue over $8 Billion USD which is a 68% increase from 2022[4]. During this same timeframe Nu Bank improved their earnings per share from -$0.08 EPS (2022) to $0.22 EPS (2023). Nu Bank’s growth and the attractiveness of Brazil’s emerging technology companies has been driven by Central Bank Reforms that have allowed for innovation and more inclusive banking. Given the progress on reforms and the improved investment conditions, and Brazil could reach center stage of the Technology world.
The spotlight in 2024 will be at it brightest in November when Brazil hosts the G20 and will have the opportunity to showcase Brazil’s leading clean energy economy and emerging financial technology capabilities. For the momentum to continue, investors will be paying attention to any shifts in fiscal reforms by the Lula government. In the current global volatile environment, any missteps and that spotlight could fritter away.