Why Brazilian stocks look cheap

More good news from Brazil. The country says it is to pay back $15.5bn to the IMF, marking the "end of a long history of financial turbulence", says Reuters.

The country's debts have fallen significantly over the last three years and are now at the kind of manageable level (52% of GDP) that means that it can now do what investors have long been waiting for it to do concentrate on growth.

This is something that really shouldn't be too hard. Brazil is rich in commodities, so should be able to make the current boom work well for it, while domestic consumer demand is already strong (according to Merrill Lynch, there are more dollar millionaires in Brazil than in China or in India) and will get stronger if interest rates fall further, as many now expect them too.

Yet despite all this good news, the Brazilian market is cheap. On an average p/e of under ten times and offering an impressive yield of 5.6%, it is, Wil Lander, manager of Merrill Lynch's Latin American fund told the FT, "the cheapest market on the continent". The Merrill Lynch fund is 60% weighted to Brazil, but you can get even purer exposure via the new iShares MSCI Brazil exchange traded fund.