Analysing the growth of the Bovespa index from 2004 onwards.
Vincent van Werd - 319088
The Brazilian stock market has been growing steadily since 2004, as will later been shown in detail with illustrations. Which factors impeded growth before that period and which ones facilitated the growth as from 2004? Was the development of Bovespa due to regulatory changes or were other factors involved?
Economic factors
To determine the role of corporate law in the development of the stock market, I would like to take some other factors into account first. Perhaps we will find that the importance of other factors was much bigger than that of the corporate law. First of all let us illustrate the development of the stock market. In the graph below, the growth of the Bovespa index is being shown. This graph clearly shows the growth of the Bovespa index. Especially between the year 2003 and the first months of 2008 there has been a rapid growth. After a steep downward movement as of May 2008, the index quickly recovered back to the previous high level by January 2010. In the most recent years, the index has been more stable.
Now that we have seen which growth exactly we are analysing, to continue I would like to illustrate some core economic figures, starting with the inflation rate. Brazil has a history with periods of hyperinflation, causing new currencies to be introduced every once in a while, only to get even higher inflation again. During the introduction of the Plano Real, inflation was still sky high. In June 1994 inflation was 5000%. In July of that year the Real currency got introduced. Ever since then, inflation is low and stable. As can been seen in the graph below, especially after 2004 inflation is one-digit and very stable.

Another important economic figure is the exchange rate. Particularly for international investors this is of interest. When