The Stock Market in April

So as not to lose the perspective of the longer term elements of the Brazilian Stock
market in April, we will discuss developments through April 15th, and then deal with the
events of April 16th separately and discuss their likely long term effects.

The news in April has been positive, with the Ibovespa reaching 71,417 on April 9th. By
April 15th the index had fallen back to 70,524, which reflects an increase in the month of
1.5%, and an increase in 2010 of 2.8%. This positive performance was fuelled by strong
consumer growth numbers, good corporate earnings, and continuing predictions for
economic growth of over 5.5% for 2010.

Figure 1
Ibovespa in 2010
Up to and including April 15th
74000
72000
Ibovespa

70000
68000
66000
64000
62000
1/

1/

1/

1/

2/

2/

2/

2/

3/

3/

3/

3/

3/

4/

4/
15
4/

11

18

25

1/

8/

15

22

1/

8/

22

29

5/

12
20

20

20

20

20

20
/2

/2
/2

/2

/2

/2

/2

/2

/2
1

0
0

10

10

10

10

10

10

10

10

10
Source: Yahoo Finance

However, the shorter the period under review, the less well the performance of the
Ibovespa has been, compared with other indices. For instance, Looking to the
performance of six indices in 2010, we find [The indices chosen were the Dow Jones
Industrial Average (“DJI”), and the Standard and Poors 500 (“S&P 500”) of the USA, the
Financial Times and London Stock Exchange 100 Index (“FTSE 100”) of the United
Kingdom, The Cotation Assistee en Continu 40 (“CAC 40”) of France, China`s Hang
Seng Index (“HSI”), and Brazil`s Indice da Bolsa de Valores de Sao Paulo (“Ibovespa”)]:

Figure 2
Sock Market Performance, 2010
Up to and including April 16th
110.0%

105.0%

100.0%

95.0%

90.0%

85.0%
1/

1/

1/

1/

2/

2/

2/

2/

3/

3/

3/

3/

4/

4/

4/
12

21

28

4/

11

18

25

1/

15
7/

14

18

25

4/

11

8/
/3

20

20

20

20

20
/2

/2

/2

/2
/2

/2

/2

/2

/2

/2
1/

10

01

01

01

01

01

10

01

01

10

01
20

10

10

DJI FTSE CAC HSI IBOV S&P

0

0
0

0
09

Source: Yahoo Finance

The S&P has grown 8.7%, the FTSE, 7.6%, and the Dow Jones 6.9%, and the CAC 40
has grown 3.3%, whereas the Ibovespa, as noted above has grown 2.8%. The only index
that the Ibovespa has outperformed, of the six considered, is the HSI with a growth of
1.3%.

Looking at the performance of the stock markets since October 20th, 2010, which was the
date on which the Brazilian Government imposed a 2% tax on investments from
foreigners, and a 1.5% tax on investors that buy Brazilian stocks outside Brazil (via
depository receipts) we find in considering the same six stock markets:

Figure 3
Stock Markets Performances, October 20th 2009 - April 15th, 2010
115.0%

110.0%

105.0%

100.0%

95.0%

90.0%

85.0%
10
10 /2 0

11 /2 0

11 20 0
11 /2 0

11 /2 0
12 /2 0

12 20 0
12 20 0

12 /2 0
12 /2 0

1/ /2 0

1/ 1 0
1/ 20 1

1/ 20 1
2/ 20 1

2/ 01 0
2/ 01 0

2/ 20 1

3/ 20 1
3/ 1 0

3/ 01 0
3/ 20 1

3/ 0 1
4/ 20 1

4/ 1 0
19 0

23 0
5/

12

26 0
2/

9/
16

23 0

2/
9/

16

30 0
6/

13
/2
/2 09

/3 09

/1 9
/1 09

/2 09
/1 09

/8 9
/1 9

/2 09
/2 09

2
20 09

2 0

20 0

20 0
/

/2
0
7

0
7

/
5

2
9

/2
01
DJI FTSE CAC HSI IBOV S&P

0
Source: Yahoo Finance

The S&P, the FTSE and the Dow Jones are all up 11.0%. The Ibovespa is up 8%, and the
CAC 40 is up 5.0%. The HIS is down 1%.

The area of opportunity for speculative capital has become the undervalued sock
exchanges of the USA and the UK. Thus, foreign capital has flown, or returned to these
markets as, compared to Brazil, and other emerging markets, the upside potential of the
USA is currently greater.

April 16th 2010

On Friday, April 16th the USA’s Security and Exchange commission filed charges against
the investment banking firm, Goldman Sachs, claiming that it packaged mortgage
obligations into a fund that was then sold to investors, with Goldman and other clients
betting against the securities that were issued. Goldman vigorously denies wrong doing.

Stock markets on Monday, April 19th opened lower on the news that the Financial
Services Authority of the UK and Germany will also investigate Goldman.

The extent of the Stock Market losses on Friday was as demonstrated in Figure 4, below.
The CAC 40 lost 1.94%, the Ibovespa and the S&P lost ground by 1.6%, the FTSE by
1.4%, the HIS, 1.3%, and the DJI 1.1%. The shares of Goldman Sachs lost 13% on the
day.
 4/

96.0%
97.0%
98.0%
99.0%
100.0%
101.0%
102.0%
103.0%
104.0%

1/
20
4/ 1 0

DJI
2/
20
10
4/
3/
20
4/ 1 0
4/
20
FTSE 10
4/
5/
20
4/ 1 0
6/
20
10
4/
7/
20
4/ 1 0
CAC 40

8/
20
10
4/
9/
2
4/ 01 0
10
/2
HSI

01
4/
11 0
/2
4/ 0 10
12
/2
01
4/
13 0
/2
Stock Market Performance in April

4/ 0 10
Ibovespa

14
/2
01
4/
15 0
/2
4/ 0 10
16
/2
S&P

01
0