Here’s Why Singapore’s GIC is Expanding Investments in Brazil

brasilDespite headwinds of a presidential election, higher inflation, and the possibility of deep budget cuts and increased taxes, institutional investors like sovereign wealth funds and pensions are betting on Brazil’s long-term economic viability. For Latin America, sovereign funds are not terrified by short-term volatility. Pensions and sovereign wealth funds center on consumer-oriented companies, counting on middle class expansion. According to World Bank data, in 2005, the poverty headcount ratio in Brazil was 30.8%. In 2009, the ratio lowered to 21.4%. Attractive sectors for public pensions and sovereign funds in Brazil run from, infrastructure, real estate, telecommunications and consumer goods like food.

Lim emphasized opportunities in the larger emerging market countries, advocating the proliferation of supply-side trends.

Being Selective – National Champions

Public asset owners can be selective in their investments, picking national champions in emerging markets. For example, recently Singapore’s GIC Private Limited boosted its stake in BRF to 4.4% from 3.8%, a São Paulo-based food processor. BRF, also known as Brasil Foods, was created by the merger of Perdigão and Sadia and is the world’s 10th biggest food company. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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