Brazil invests approximately 2.0% of GDP in infrastructure, which is barely enough to compensate for depreciation and keep up with population growth. Brazil would have to double or even triple investment in infrastructure for the next 20 years to reach the same level of a country like South Korea.

Public investment in infrastructure declined in the federal government last ten years, as it was one of the few items that the government could cut to adjust its fiscal accounts. Excessive bureaucracy also impairs investments.

The government estimates that the FIFA World Cup in 2014 and the Olympic Games in 2016 will demand investments that will exceed all investments done by the federal government in seven years.

The government is making an effort to raise investments through the National Development Bank (BNDES), and also offers tax incentives for bonds aimed at financing infrastructure projects.

The decision to offer airport concessions to the private sector reflected the government's inability to invest in the sector and concern about the World Cup. However, the concessions were mainly awarded to pension funds of state-owned enterprises, and there is strong ideological resistance against privatization.

The lack of public investment in infrastructure and access to financing and high regulatory risk depress private investment too.

Eoin Treacy's view Brazil and Russia are often conflated with India and China to form the BRIC acronym. However the individual countries represent some quite distinct themes and while convenient, it is not altogether helpful to consider them as a unified whole.

Brazil is a middle income country. It already has a consumer led economy and well established middle class. Its position as a major agriculture, industrial resource and energy exporter has allowed it to benefit enormously from demand growth in Asia. Additionally, a number of Brazilian companies compete globally in high value added manufacturing sectors such as aerospace.

President Lula's fiscal reforms nearly a decade ago, in conjunction with the boost from commodity prices set the country on the road to creditor status and a firm currency. It is reasonable to conclude that the bullish proposition rests on continued reform and improving standards of governance that can help drive productivity growth..

It is to be hoped that investment associated with major sport events will be accompanied by roads, railways, airports, schools and other assets that contribute to growth. Bread and circuses has long been a favoured policy route for politicians everywhere but does little to improve economic development or competitiveness. Infrastructure bottlenecks in the commodity sector are an impediment to growth and need to be eliminated to maximise the country's competitive advantages. Labour productivity needs to be a priority.

It is interesting that the Real has weakened since the government abandoned overt efforts to stop it strengthening. Perhaps the realisation that the country needs to do everything possible to foster foreign investment rather than simply adopting a go it alone attitude has something to do with this change. The US Dollar found support in the region of the 2008 lows in July and rallied impressively. It has since found support in the region of the 200-day MA on a number of occasions and a sustained move below it would be required to question medium-term scope for additional upside.

The Bovespa Index has responded well to the lowering of interest rates, the weaker Real and scrapping of the IOF tax. It pushed back above the psychological 60,000 in late January and retested the 70,000 area three weeks ago. The Index found at least short-term support in the region of 65,000 yesterday and a sustained move below 64,000 would be required to question medium-term scope for additional upside.

The outperformance of the Brazilian affiliates of foreign multinationals would appear to support the contention that companies with an advantage in their standards of governance and balance sheet support are being rewarded with a premium.

In the Telecommunications sector, TIM Participacoes (1.17% yield) is 77% owned by Telecom Italia. The share broke upwards in February and has been rallying for the last six weeks. While increasingly overbought in the short-term a sustained move below the MA, currently near BRL9.5 would be required to begin to question medium-term upside potential. Telefonica Brazil (3.22%) is 35% owned by its Spanish parent. The share remains in a consistent step sequence uptrend and a sustained move below BRL50 would be required to begin to question medium-term uptrend consistency.

In the Brewing sector Ambev (2.47%) is 62% owned by Belgium/US brewer AB-Inbev. The share is accelerating higher and at risk of a reversion towards the trend mean. However, a reaction of greater than BRL8 would be required to check momentum beyond a brief pause.

In the Utilities sector, AES Tiete (10.43%) is 32% owned by the USA's AES Corp. The share remains in a relatively consistent medium-term uptrend and a sustained move below BRL 24 would be required to question that view. Tractebel Energia SA (4.86%) is 69% owned by France's GDF Suez. The share also remains in a consistent medium-term uptrend. Cia de Transmissao de Energia Eletrica Paulista (1.85%) is 54% owned by Colombia's Interconexion Electrica. The share broke out of a three-year range in December, pulled back to find support in the region of the 200-day MA and posted a new all-time high three weeks ago. A sustained move below BRL55 would be required to check potential for additional upside.