First-time investors are flooding Brazil’s stockmarket | The Economist

First-time investors are flooding Brazil's stockmarket

But fiscal uncertainty threatens the boom

“MY PARENTS NEVER talked about investing,” says Arthur Lira, a university student from Olinda, a city in Brazil's poor north-east. In March, after hearing on YouTube that it was a good time to buy stocks, he set up an account with an online brokerage and bought shares in airline companies with 400 reais ($75). Every month he puts a sliver of his scholarship into the Brazilian stockmarket, the B3. His shares have gained 30% on average.

Retail investors are diving into the stockmarket in Brazil, much as they are from America to South Korea. Since 2017 the number of retail investors in the B3 has quintupled to more than 3m, thanks to a dramatic fall in interest rates-the central bank's policy rate has fallen from 14.25% in 2016 to 2%-and the rise of affordable brokerages, notably XP Investimentos. Fully 1.5m piled into the markets in 2020 alone.

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