Brazilian retail BDR investors soar more than 1,400% 1 year after new rules

The number of Brazilian retail investors in Brazilian Depositary Receipts jumped more than 1,400% to over 264,000 one year after regulator CVM changed the rules to allow them to purchase the depositary receipts.

The broader investor base that now has access to Brazilian Depositary Receipts, or BDRs — certificates traded in Brazil that represent shares of foreign companies — should continue to boost the retail capital market and increase demand for local listings.

Individual investors now hold about 20% of BDRs, more than 4.7 billion reais in November, up from under 1 billion reais a year earlier, according to data compiled by B3, the Sao Paulo stock exchange. In the last 12 months, there was an increase of 800,000 individual investors to 3.3 million in the market, representing 16% of the total resources invested in equities in B3 SA - Brasil Bolsa Balcão.

In November 2020, CVM revised its regulations to allow retail investors to purchase BDRs, prompting a rush to foreign stocks and other new B3 products. Among the top 10 holdings are Apple, Coca-Cola, Tesla, Mercado Libre and Alibaba.

Retail investors have also taken advantage of other new products on B3, including real estate funds, where the number of investors is up 40% to 1.5 million from a year earlier, and exchange-traded funds, which saw a 96% increase in retail investors, to 474,000.