Stock markets in the developing world are not for sissies. Who can forget the scenes of late last decade, when financial contagion swept bourses from Bangkok to Buenos Aires, bringing traders to their knees? It was no different in Brazil, where in 1999 the overvalued real collapsed practically overnight, taking the São Paulo Stock Exchange (Bovespa) with it. It wasn't long before the sages started dissing Latin America's biggest economy, calling for financial rainmakers to take the B out of BRICs, the acronym for the world's trendiest emerging markets - Brazil, Russia, India and China.
What a difference a decade makes. On October 26, the traders will be frantic again, this time clawing each other for a chance to get a piece of one of the world's hottest properties. Yes, Bovespa is going public. And if the market buzz is to be believed, by the closing bell on Friday, Brazil will have shepherded one of the largest IPOs of the year.
With share prices set at 23 reais (about $13) a pop, the company that currently owns the 117 year old bourse, Bovespa Holding, is set to bag an invigorating $3 billion-plus (R$5.8 billion), on sale of about a quarter of its stock, which would put the company's total market worth at just under $9 billion.
Ok, that's small beer -café pequeno, in the vernacular - next to the giants of the genre, like the New York Stock Exchange and Nasdaq. (Bovespa ranks 21st worldwide, by volume of trade.) But what the São Paulo exchange lacks in heft, it makes up in lift. Trading on Bovespa has jumped nearly twenty-fold in five years, from a piddling $300 million in 2002 to around $2.4 billion today.
The stock market reflects a sea change in Brazil itself, where the economy is shaking off years of stop-and-go growth, high inflation, and company-killing interest rates. Once content to be kings of the hilll, Brazil's sleeper corporations are now world weight contenders and -judging by the investors fighting their way into Bovespa -tomorrow's blue chips.
Perhaps it's time to put the B back into BRICs.
