Stock market shows stronger ties between Brazil and China

By Evaldo Albuquerque

As developed nations suffer with ballooning debt levels, we will see closer economic relations among emerging markets. The relation between China and Brazil is a good example. This year China already replaced the U.S. as Brazil’s top export destination.

In the coming years, economic integration between the two emerging market heavyweights should grow in strategic importance, as China seeks to consolidate its access to mineral resources.

From the Brazilian perspective, more robust trades with China will provide an important cushion for the country’s export sector as the developed nations struggle to recover from the financial crisis. So both countries view that relation as a win-win situation.

This closer relation between China and Brazil is now clear in stock market. The correlation between the stock markets of these two countries has been increasing for the past few years.

The influence of the Chinese market over Brazilian stocks already surpasses that of the U.S. market. Some investors also have started to view the Brazilian market as a strategic way to get exposure to the Chinese growth story.

As the economic power shifts from West to East, such collaborations between emerging markets will become more common. Developing nations will have to strengthen relations among themselves to offset the decline in demand from developed nations. 

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