It must be annoying to hear one’s country consistently praised for its natural resources—attributes that imply a lack of development. So when investors continue to speak of Brazil’s value as a commodity exporter to China, it frustrates Allan Hadid, the chief operating officer of BRZ Investimentos, which at $2.6 billion is Brazil’s third-largest asset management and hedge fund firm. He argues that the country’s budding credit and secondary markets offer far superior opportunities for investors than its commodity markets.
What most investors don’t realize, he says, is that commodity exports are a small serving of the Brazilian stew: Exports account for 9.7% of Brazil’s gross domestic product, with sales to China accounting for 1.2%. Brazil’s iron ore, oil, tobacco, grain and wood pulp exports are a fraction of the economic story. ...