A few years ago, investment expert Igor Cornelsen was a major player in the Brazilian banking industry. Cornelsen knows Brazilian banks like to make money during tough economic times, and the banks are not disappointing him. The two largest banks in the country, Banco Itaú and Banco Bradesco are making a lot of and money. Wall Street is singing the praises of those two financial players. Both banks are smart enough to invest in government bonds and insurance policies that kept the recession at arm’s length.Igor Cornelsen also knows the banks only lend money to the people that can pay it back, according to a prnews.com report. This form of selective credit is not new. Brazilian’s deal with high-interest rates and untouchable loans like Americans deal with horn-honking in New City. They ignore it and go around the system.
Cornelsen also realizes the people with so-so credit must either fund a business with cash, work with a high-interest public sector bank or just pass on a good business opportunity. The new Brazilian government is not making matters any easier. President Michel Temer may have a few corrupt ghosts in his closet, and that is creating more drama in the Brazilian political arena. Cornelsen helps his investment partners understand the Brazilian market before they decide to take the plunge and sink money into the largest economy in South America. Cornelsen is high on Itaú’s stock because of its size after merging with Unibanco in 2008. And now that Bradesco has the Brazilian division of HSBC in the family, Bradesco’s stock is hot again.
Cornelsen likes Joaquim Levy, the Brazilian finance minister because he understands how the banks operate. The fiscal reforms that Levy is putting in place are making a difference in the banking sector, and he likes the private sector. Mr. Igor Cornelsen likes to bring China into the investment conversation. China plays an important role in the health of the Brazilian economy. Brazil and China are BRICS members, and they have a close trade relationship. China is one of the reasons Brazil’s economy imploded a couple of years. China is having issues with economic expansion, and the increase in non-collectible bank debt. Investors must stay on top of what’s happening in China in order to get what they want from Brazil.
Brazil’s overvalued currency is another issue that could and often does, create a lack of competitiveness on the global market. The new government continues to devaluate the real, but the process takes time. In spite of the challenges, Brazilian bank stocks are a good investment, according to Igor Cornelsen.