Brazil is certainly in this basket of falling markets. Fortunately for you, it shouldn’t be.

Sure, more than half of Brazil’s exports are commodities like soybeans and iron ore. But there’s a very good reason why Brazil is a safer investment than most — stability. Before you get started, let me explain…

Over the past two decades, Brazil has gone through many crises. Each one taught the country how to handle poor economic situations. But it was the most recent one that puts us in a tremendous advantage.

After so many years of falling on its face, Brazil elected President Luiz Inacio Lula da Silva. Leaving our opinions aside, Lula has done something to put the country in the driver’s seat this time around.

At the beginning of this decade, the world punished Brazil for its high debt levels. Its market crashed, erasing years of growth. Since this pseudo crisis, the Lula administration has stabilized the country’s economy and paid down debt. On top of these moves, it’s also put tough regulations in place across many industries. Most investors thought these regulations limited growth, which they did. But now investors – or, at least, smart ones – see the regulations as necessary evils.

By regulating industries like energy and finance, Brazil kept a steady, stable growth rate of about 4% in recent boom years. The rest of the emerging nations of the world were getting used to a 7% rate. These other “emergers” were funding their growth by leveraging their assets and creating massive debts. Brazil was paying its down, while accruing next to no new debt.

The overall stock market hasn’t noted this major difference, however. Brazil’s major index, the Bovespa, is down 40% over the last 12 months – alongside the rest of the world.

While others struggle with “bad assets” and massive debts, Brazil will be ready to strike.

Energy is our favorite way to play Brazil. Without energy, you can’t expand. Just look at what China is doing these days. As it continues to come online, it burns through more coal and oil than anyone could have imagined. Brazil, while it’s no China, is still demanding an enormous amount of energy.

The largest difference between Brazil and China is the regulations. There are many more aggressive mandates in the Brazilian energy industry than most Chinese, or Americans for that matter, can even fathom.

For instance, there’s been a lot of talk in recent years here in the U.S. about switching regular gasoline for ethanol to power our light vehicles. Brazil has been doing this since 1975. That’s over 30 years of mandates, which require all light vehicles to use at least 25% ethanol blends. The country is the world leader in ethanol efficiency. That came from strategic mandates.

The rest of the Brazil’s energy situation is no different. In recent years, hydroelectricity became the country’s energy solution. Now 80% of Brazil’s electricity comes from hydropower. This energy revolution places Brazil 42nd in CO2 emissions worldwide. It produces less CO2 than countries like Israel and the Philippines, which are just fractions of Brazil’s size and population.

Early investors in Brazil’s booming hydropower industry stand to make massive gains, while the rest of the world’s nations are trying to put their own economies back together. That’s where you need to be looking.

Source: Brazil’s Hydropower Advantage

If you missed out on China three years ago… don’t worry there’s a second bite of the cherry coming around. China and scores of other countries are outsourcing to Vietnam on a grand scale… and foreign investment is pouring into the country at a rate of knots… so much so that the Vietnamese economy looks set to take off as fast as China’s did… let me explain…

China sucked in more than 65% of the $792 billion in investment received by 21 leading Asian economies over the past five years. About 90 per cent of that money went into China’s coastal southeast region, which accounts for 60 percent of the country’s total exports. Growth is concentrated mainly in four provinces on China’s south-eastern coast: Guangdong, Jiangsu, Fujian and Zhejiang.

But the rest of China hasn’t shared in this bonanza. Incomes in western China’s poorest regions are one-tenth those of the richest areas on the east coast. That’s helped to double average monthly pay in the Dongguan city, China’s largest manufacturing centre, from 1,284 yuan in 2001 to 2,594 yuan in December 2006.

That growing income gap has been made the Chinese government extremely nervous – the last thing that they need is 700 million angry prols and peasants…

So, to help encourage investment and narrow the disparity, the comrades in Peking launched a “Go West” policy in 2000, to encourage manufactures to move inland. They’ve spent over $140 billion trying to put the major infrastructure in place to make that happen. They’ve built highways, airports and hydropower stations. But it just doesn’t seem to be enough.

Even with the improvements, power failures, substandard roads and congested railways reduced production in 2004 by 9.5 percent in the south-western city of Kunming. In coastal Shanghai, they cost only 2.3 per cent. So manufacturers aren’t really thrilled by the idea of “going West.” Instead, more and more of them are going South…to Vietnam.

Vietnam trounces China into the ground…

Of course, Vietnam isn’t just doing well because of China’s woes. It’s been making great strides of its own on just about every front. The country has been aggressively luring low-cost industries and it’s paid off massively.

Vietnam received $40.1 billion in pledged investment during 2007 – that’s up a whopping 354% from five years ago. And it absolutely trounces the $11.9 billion that foreign companies announced they plan to invest in central and western China last year. That’s just 30 per cent more than the $8.9 billion in planned investment that they announced in 2003.

And ever since they joined the World Trade Organization in 2007, they have had greater access to world markets. Last July, PricewaterhouseCoopers ranked Vietnam as the most competitive destination for manufacturing businesses among the world’s top 20 emerging markets; China was second.

This doesn’t mean the end of China’s economic miracle. The Asian giant has been increasing its production of higher- value goods — computer chips, electronic gadgets, automobiles. China’s exported about $47.6 billion of high-tech products last year and they now make-up 28.5 percent of total exports. That’s up by 412 percent since 2002.

But the country is losing its ability to compete at the lower end of the manufacturing industry. And that’s opening up a brilliant opportunity for Vietnam. Because it’s not just international companies that see better value in Vietnam – even Chinese manufacturers are considering relocating to stay competitive.

Ray King, export manager at the Zhejiang Hefeng Shoes Co., which employs 1,000 people says “Customers say our prices are crazy…They always say other suppliers in Vietnam and Thailand are cheaper.” So now he’s thinking of relocating to Vietnam. And he’s far from alone.

In fact, a third of the manufacturers in Guangdong province – which produces 30% of China’s exports – will be closed in three years as they relocate to surrounding Asian countries according to a report by merchant bank Credit Suisse two weeks ago.

China passes new law that guarantees Vietnam’s advantage…

A big part of Vietnam’s growing advantage over China is its lower wages. Vietnam’s labourers earn an average of $104 a month. That’s 41% less than what China’s lowest-paid workers in the central province of Jiangxi make.

And China has passed a new labour law that practically cements Vietnam’s advantage. The law requires companies to pay minimum wages and severance pay and it has helped drive up the cost of labour in China by 22% over the last year.

The era of cheap goods from China is coming to an end – and fast. It isn’t going to be long before “Made in Vietnam” becomes as ubiquitous as “Made in China” is today or “Made in Japan was in the 80’s.

How can you profit from this?

Given the massive windfall that Vietnam is set to reap, we think that it’s a brilliant time to buy into this growth story.

As with every emerging economy – it is vital to not only get in at the right time… but to invest in the best way to make maximum profits…

Over at Profit Hunter we believe that we’ve found the best way to do this… find out what this is right now…

Regards,

Manraaj Singh
Editor
Profit Hunter