Goldman Sachs grows in Brazil
Tess Vigeland: The good news for Wall Street? Investment banks are hiring. The bad news for New York? It’s happening in Brazil.
This year, Goldman Sachs reportedly plans to hire about 20 percent more people for its operations in Brazil. Other U.S. banks are also raising their bets on South America’s largest economy. As Marketplace’s Jeff Tyler reports, Brazil has some advantages over other emerging markets.
Jeff Tyler: Goldman Sachs wants a bigger piece of the market in Brazil. According to Bloomberg, Goldman is hiring more employees as it invests in everything from asset management to trading and private banking. Credit Suisse and JPMorgan Chase are also beefing up their Brazilian operations.
What makes the country so attractive?
Allan Nichols: You can lend money in Brazil and get a much higher interest rate than you can in the U.S., or in Europe or Japan.
Allan Nichols is an equity analyst with Morningstar.
Nichols: In the U.S., interest rates are 2, 3 percent. They’re 11.5 in Brazil.
Brazil has raised interest rates in an effort to slow economic growth to a sustainable pace. This year, Brazil’s economy is expected to grow about 4 percent. Compare that with around 10 percent growth in China or 7 percent in India.
Gary Hufbauer is with the Peterson Institute for International Economics. While those other emerging markets may at first appear more lucrative, Hufbauer says Brazil has some advantages.
Gary Hufbauer: Brazil does business in a much more transparent and reliable way in terms of property rights than China. And it is not nearly as bureaucratic as India.
Prospects are good for investment bankers in Brazil. Analysts expect lots of mergers and acquisitions. To top it off, Brazil’s currency has been getting stronger, so investment banks could also profit from the exchange rate when they bring their profits home.
I’m Jeff Tyler for Marketplace.
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