To understand where we are heading, here are the facts:
1. Brazilian firms have historically low debt to equity ratios because interest rates are high.
2. Massive IPOS at the peak of the market rally has made Brazilian firms and banks SUPER CAPITALIZED.
3. Due to this crisis, real interest rates have plummeted from 8% real to 3% real after tax. Now we are talking. Under-leveraged companies can leverage for the first time in Brazil.
4. Whilst European banks and companies and American banks and companies are over-leveraged, Brazilian companies are under-leveraged, by far.
5. Leverage raises return on equity many fold, and that is what will happen to Brazilian companies. Retained earnings will increase, fueling further growth, and setting a virtuous cycle we have never seen before.
6. Stock holders from now on need not fear being diluted, no more IPOS necessary for a good couple of years.
7. 2,000.000 MBA's and business graduates is what Brazil will have at its disposal in 2010, compared to 300.000 in 1994. They will change the Brazilian mindset even more. Henrique Meirelles is the first MBA to head our Central Bank, and he did wonders using common business sense.
8. Lula is the first President that has actually worked in a company, knows how to read a balance sheet, knows what is necessary to keep a company profitable to be a high wage payer.
9. Single digit interest rates means double digit corporate profit rates, high investment rates and high growth rates.
1. Brazilian firms have historically low debt to equity ratios because interest rates are high.
2. Massive IPOS at the peak of the market rally has made Brazilian firms and banks SUPER CAPITALIZED.
3. Due to this crisis, real interest rates have plummeted from 8% real to 3% real after tax. Now we are talking. Under-leveraged companies can leverage for the first time in Brazil.
4. Whilst European banks and companies and American banks and companies are over-leveraged, Brazilian companies are under-leveraged, by far.
5. Leverage raises return on equity many fold, and that is what will happen to Brazilian companies. Retained earnings will increase, fueling further growth, and setting a virtuous cycle we have never seen before.
6. Stock holders from now on need not fear being diluted, no more IPOS necessary for a good couple of years.
7. 2,000.000 MBA's and business graduates is what Brazil will have at its disposal in 2010, compared to 300.000 in 1994. They will change the Brazilian mindset even more. Henrique Meirelles is the first MBA to head our Central Bank, and he did wonders using common business sense.
8. Lula is the first President that has actually worked in a company, knows how to read a balance sheet, knows what is necessary to keep a company profitable to be a high wage payer.
9. Single digit interest rates means double digit corporate profit rates, high investment rates and high growth rates.
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