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January 2005 2

Overview

Central Bank to continue pressuring interest rates

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Source: IBGE, Secex, FGV, Fipe, Gazeta Mercantil e Banco Central do Brasil. Accumulated rates over the last 4 quarters; 2Percentage varitaion in relation to the same period of the previous year.3Accumulated statistcs in 12 months through the period. 4Accum. In the year. 5Positive values corresponds to deficits,nominal data excludes exchange devaluation.

2003 2004 20034 20043Economic Activity Inflation, %GDP ( Real Var.4Q%) 0.5 4.2 3rd Qt. IPC-Fipe 8.2 6.6 dec Industry 0.1 4.6 3rd Qt. IPCA Brasil 9.3 7.6 dec Agriculture 4.5 5.3 3rd Qt. IGP-DI 7.7 12.1 dec Services 0.6 3.1 3rd Qt. IPA-DI general 6.3 14.7 decGDP, R$ bi (current) 1,556 - 3rd Qt. IPA-DI industrial 6.9 19.5 decGDP, US$ bi (current) 507 - 3rd Qt. IPA-DI agriculture 4.6 2.7 decGross Capital Formation (%) -5.1 7.7 3rd Qt.Real Income (%) (INPC)2 -5.4 6.1 nov Exchanges and interestForeign Accounts, US$ billion3 2003 2004 R$/US$ (var. %)4 -18.2 -8.1 decCurrent Account 3.6 10.7 nov Closing prices (R$) 2.889 2.654 dec In % of GDP 0.7 2.8 nov Nominal interest (CDI), % 23.3 16.2 dec Services and income -23.6 -25.5 nov Real interest (IGPM), % 13.4 3.3 decTrade Balance 24.8 33.7 dec Interest in dollars, % 50.7 25.8 decExports 73.1 96.5 dec Public Accounts, % of GDP 5

Imports 48.3 62.8 dec Primary result -4.3 -4.6 novCapital Account 13.3 -14.8 nov Nominal interest 9.5 7.2 novForeign Direct Investment 10.2 16.4 nov Nominal result 5.2 2.6 novInternational Reserves 49.3 52.9 dec Net Total Debit 57.2 51.1 nov

he Central Bank will not loosen monetary policy as long as forecasts indicatethat inflation will outstrip the 5.1% target for 2005. The final figures for the BroadConsumer Price Index (IPCA) in 2004, which were far above the central target andnearly reached the ceiling, reinforced the Central Banks bias towards higher interestrates to curb inflationary pressure in the productive sector. The main price indicescontinued showing mixed signals at the end of the year and monetary authoritypreferred not to run the risk of relaxing policy now only to have to raise interestrates sharply later.

Trade results were outstanding in 2004, along with the remarkable GDP expansion.Exports grew above the global average and even the solid increase in imports did nothinder a record US$ 33.7 billion trade surplus.

The trade performance made a decisive contribution to the current account surplusin the balance of payments, which reached 2.8% of GDP in 2004, a result that Brazilhad not obtained in recent decades even in more favorable scenarios of strong economicexpansion and one-digit inflation.

January 2005 3

Trade Balance

Trade flow still strong

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Amounts in US$ billion % variation compared to the previous year

Oct Nov Dec Accum/04 Oct Nov Dec Accum/04

he US$ 3.51 billion surplus in December represented a 27.9% climb over thesame month in 2003, on US$ 9.19 billion in exports and US$ 5.68 billion in imports,up 36.25% and 42.21%, respectively, based on the same comparison.

The performance in the last month of the year was in line with the exceptionaltrade flow witnessed throughout all of 2004. The record US$ 33.7 billion trade surplusrepresented a 35.91% climb over the result a year earlier. Imports soared 30% to US$62.78 billion, while exports climbed 32.01% to US$ 96.48 billion, well above the18.3% expansion in global trade in 2004.

A number of factors favored the export performance including higher foreigndemand and better international prices for Brazils major commodities. Basic productsand semi-manufactured goods benefited the most from international prices, climbing19% and 13.3%, respectively, and with export volumes soaring 13.7% and 8.6%.Manufactured goods sales stood at US$ 52.95 billion; those of basic goods (US$28.52 billion) and semi-manufactured products (US$ 13.43 billion). With this, theshare of manufactured goods in the countrys export roster rose from 54.3% in2003 to 54.9% in 2004.

By destination, the highest expansion in exports were obtained in Mercosur(57.1%) exports to Argentina grew 61.7% the Latin American IntegrationAssociation (LAIA) excluding Mercosur (climbing 48.8%) and Africa (48.4%). Othersignificant growths occurred in the Middle East (31.4%), the European Union (30.9%),Asia (24.7%) and the U.S. (20.4%).

With the strong trade results, the current account surplus had reached US$ 10.7billion, or 2.8% of GDP, in the 12-month period ended in November. Besides loweringBrazils vulnerability to external shocks, the strong surplus paves the way forcontinued economic growth.

Sources: Secex, Bacen and Gazeta Mercantil.

Exports 8.84 8.16 9.19 96.48 16.89 36.44 36.25 32.01Imports 5.84 6.08 5.68 62.78 16.02 42.67 42.21 29.98Balance 3.01 2.08 3.51 33.71 18.62 20.98 27.59 35.96International Reserves 49.41 50.13 52.94 - -8.65 -7.89 7.38 -

January 2005 4

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Amounts % % in 12 monthsOct Nov Dec Oct Nov Dec

Interest rates and the forex market

Basic interest rate ends year at 17.75% p.a.

he report on the Monetary Policy Committees (Copom) last meeeting in 2004reiterated the Central Banks commitment to the adjusted inflation target for 2005 of5.1%, even if that implies continuing the interest rate hikes that had pushed the Selicrate to 17.75% p.a. by December, after bottoming at 16% p.a. in April where it remainedfor five months.

The monetary authority believes that strong economic activity stimulates thepropagation of inflationary pressure from external markets, particularly oil, andreadjustments in administered prices. As long as there are not consistent signs of adecline in these pressures and slowing of economic expansion, the Central Bank willkeep its reins on monetary policy.

The real closed out the year at R$ 2.65 per dollar, up 8.13% in relation to the endof 2003 and 2.79% over the November close. If it were not for the Central Banksdecision to buy dollars to shore up its international reserves, the foreign capital inflowfrom both trade and investments (direct and portfolio investment) would have resultedin an even stronger real against the U.S. greenback.

Source: Gazeta MercantilEnd of period - Ptax. 2Annualizedd monthly rate.

Exchange Rate (R$/US$) 2.86 2.73 2.65 0.01 -7.42 -8.13Annual interest rates (CDI)2 16.67 17.20 17.76 - - -Monthly interest rate 1.21 1.25 1.48 16.14 16.04 16.17Real monthly interest rates (CDI-IGPM) 0.82 0.43 0.73 3.79 3.35 3.33

January 2005 5

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Monthly variations (%) Accum. in the year (%) Accum. in 12 months (%)Oct Nov Dec Oct Nov Dec Oct Nov Dec

Inflation

Inflation above the central target and just below ceiling

ith the 0.86% rise in December, the IPCA closed out 2004 at 7.60%. Despitetight monetary policy in the second half, the percentage raced past the 5.5% centraltarget for 2004 inflation and stopped just below the 8% ceiling. The main factorpressuring prices in 2004 was the hike in oil prices, which resulted in three adjustmentsin refineries. Gasoline alone climbed 14.64% at pumps, translating into the highestindividual impact on the accumulated index or 0.59 percentage points. Inflation wasalso pressured by administered prices, such as electric power (9.64%) and wirelinephone fees (14.76%). Agricultural prices, on the other hand, aided to curb inflation,as well as the stronger real and the increased output of many products.

Inflation as measured by the General Price Index (IGP-M) closed out 2004 at12.41%, above the 8.71% in 2003, amid strong pressures from oil, steel products andadministered prices. Wholesale prices rose 15.09% and construction costs climbed10.94%. With high oil prices, fuels and lubricants rose 20.94%, creating a strongimpact on wholesale prices. If it were not for the modest 2.29% increase in agriculturalproducts prices, 2004 inflation would have been much higher. In the first 10 days ofJanuary, the IGP-M forecast stood at 0.20%.

December inflation as measured by Fipes IPC (Consumer Price Index) hit 0.67%,slightly above that of November and bringing SP inflation to an accumulated 6.56%in 2004, a sharp drop from the 8.2% in 2003. Higher prices streamed from electricity,water, sewerage, phone fees, gasoline, medical assistance and education, whichaccounted for 35% of inflation in 2004. In the first forecast for January, the IPCclimbed 0.68%.

General prices index (IGP-M) 0.39 0.82 0.74 10.69 11.59 12.41 11.91 12.28 12.41Wholesale prices index (IPA-M) 0.44 0.99 0.81 13.04 14.16 15.09 14.42 14.89 15.09Consumer prices index (IPCA) 0.44 0.69 0.86 5.95 6.68 7.60 6.86 7.24 7.60Consumer prices index SP (Fipe ) 0.62 0.56 0.67 5.27 5.86 6.56 5.99 6.30 6.56

Sources: IBGE, Fipe and FGV.

January 2005 6

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Panorama on the Brazilian Capital Market

Market Value of Ibovespa and IBX StocksCompany R$ Thousand Variation US$ Thousand Variation

November December (%) November December (%)

PETROBRS 107,734,431.10 112,458,134.12 +4.4 39,453,045.41 42,366,687.06 +7.4VALE R DOCE N1 73,227,385.36 83,290,116.35 +13.7 26,816,342.09 31,378,133.04 +17.0AMBEV 54,970,344.90 56,440,106.97 +2.7 20,130,495.81 21,262,849.22 +5.6ITAUBANCO N1 37,518,158.41 43,144,860.56 +15.0 13,739,392.25 16,254,091.53 +18.3BRADESCO N1 25,911,727.35 29,810,019.38 +15.0 9,489,042.13 11,230,417.19 +18.4BRASIL 25,818,164.67 26,345,065.99 +2.0 9,454,778.87 9,925,055.00 +5.0TELESP 22,421,349.22 24,330,783.69 +8.5 8,210,843.09 9,166,208.44 +11.6ELETROBRS 23,603,627.52 20,753,913.57 -12.1 8,643,801.05 7,818,683.53 -9.5TELEMAR 16,292,592.62 17,506,778.69 +7.5 5,966,452.79 6,595,380.76 +10.5ITAUSA N1 13,766,355.87 15,447,902.77 +12.2 5,041,328.55 5,819,734.32 +15.4TELEMAR N L 14,118,772.01 15,241,455.94 +8.0 5,170,385.62 5,741,958.99 +11.1SID NACIONAL 14,862,302.93 14,572,516.72 -1.9 5,442,671.45 5,489,947.53 +0.9EMBRAER 12,443,588.12 14,394,905.00 +15.7 4,556,922.45 5,423,035.34 +19.0GERDAU N1 13,945,233.83 13,476,012.36 -3.4 5,106,834.81 5,076,858.18 -0.6USIMINAS 11,593,059.69 11,704,556.97 +1.0 4,245,453.43 4,409,492.53 +3.9SUBTOTAL (IBOVESPA COMPANIES) 604,540,254.57 642,025,875.69 +6.2 221,386,550.91 241,872,316.04 +9.3SUBTOTAL (IBrX COMPANIES) 692,264,948.56 735,696,086.81 +6.3 253,511,901.18 277,160,973.03 +9.3TOTAL ( 358 CIAS) 848,326,811.78 904,942,604.35 +6.7 310,662,764.78 340,921,716.53 +9.7

he stock market ended 2004 as the financial investment that provided the bestreturn. Its main indicator, the Bovespa Index (Ibovespa), rose by 17.8% in nominalterms and by 28.2% vis--vis the change in the dollar rate, and ended the year at26,196 points. The Ibovespa rose practically uninterruptedly during the last sevenmonths of the year, a period characterized by the successful performance of thefundamentals of the Brazilian economy. The IBrX-50, an index weighted by the free-float of the shares making it up, rose by 26.6% in nominal terms.

The beginning of 2004 was characterized by an atmosphere of pessimism inworld markets, bringing volatility in the domestic and overseas markets. Domestically,accusations involving a former government aide, the decline in the governmentspopularity and criticism of the economic policy adversely affected the market, sincethese things might delay the progress of reforms underway in the Congress and,consequently, the recovery in economic growth. On the other hand, in the overseasmarket, the increased terrorist attacks, the chance of a change in American monetarypolicy - with a high probability of higher American interest rates - and the rise of oilprices signposted a potential extension of the period required for a recovery in theeconomies of emerging countries, leading to a certain market nervousness.

(N1) - Companies included in the Special Corporate Governance Stock Index.

January 2005 7

Source: Central Bank of Brazil.Obs: Deflated by the variation of the R$/US$ daily closing rate (Dollar selling rate)

Monthly Indexes Evolution

Index Opening Low Average High Closing Change(%)12/01/2004 - - - 12/30/2004

IBOVESPA IndexPoints 25,129 24,451 25,529 26,269 26,196 4,20%US$ 9,257 8,790 9,380 9,897 9,869 7,2%

IBrX - Brazil IndexPoints 7,240 7,206 7,510 7,824 7,796 7,60%US$ 2,667 2,596 2,760 2,948 2,937 10,8%

IVBX2 - Valor Bovespa IndexPoints 2,861 2,855 2,992 3,132 3,131 9,40%US$ 1,054 1,041 1,100 1,180 1,180 12,6%

ITEL - Telecomunications IndexPoints 897 874 903 922 919 2,40%US$ 331 314 332 347 346 5,3%

IEE - Electric Power IndexPoints 6,856 6,492 6,867 7,160 6,950 1,60%US$ 2,526 2,336 2,523 2,643 2,619 4,6%

IGC - Special Corporate Governance Stock IndexPoints 2,288 2,288 2,431 2,554 2,545 11,20%US$ 843 839 894 962 959 14,4%

IBrX-50 - Brazil Index 50Points 3,257 3,227 3,370 3,508 3,493 7,20%US$ 1,200 1,163 1,238 1,322 1,316 10,3%

As from the end of May, however, a sequence of good news about the encouragingperformance of the domestic economy cheered up the market. Economic growth of5.3% of GDP in the first nine months of the year, the surplus of US$ 10.4 billion onthe current account up to November, control of inflation, even with the recent risesin gasoline prices, and the trade balance surplus brought a degree of optimism toeconomic agents.

In addition, in the field of taxation, discipline held during the year. This was stilltruer with the revision of the annual target, which was increased from 4.25% to4.5% of GDP, helping to stabilize public debt at around 53% of GDP and earning theconfidence of foreign investors.

INVESTORS CASH FORWARD OPTIONS OTHERS TOTAL (%) Individuals 11,892,170,218 841,946,272 2,246,028,768 873,202,315 15,853,347,574 24.6 Institutional Investors 14,738,317,632 741,079,710 709,083,419 2,914,365,308 19,102,846,070 29.6 Foreign Investors 15,909,913,074 30,320,297 211,149,626 1,310,659,827 17,462,042,825 27.0 Private and Public Companies 868,871,267 143,282,375 63,723,510 1,441,690,755 2,517,567,908 3.9 Financial Institutions 7,609,857,457 345,105,277 329,439,842 1,065,703,484 9,350,106,061 14.5 Others 246,635,502 6,399,347 8,129,355 10,943,541 272,107,746 0.4

General Total 51,265,765,153 2,108,133,280 3,567,554,520 7,616,565,232 64,558,018,187 100.0

Investors Participation in the Value Traded in BOVESPA by Type of Investors and Markets(buy and sell) - December/2004

January 2005 8

This greater tranquility ended up being reflected in several indicators, such as the8.1% fall in dollar prices, the country-risk standing again at around 400 points, therise in the value of the C-Bond (the main Brazilian foreign debt security) and therising trend on BOVESPA.

The year 2004 was also characterized by the return of public offerings, whichhad not happened since 2002. Fourteen public offerings were carried out to a total ofR$ 8,804.6 million. Out of these offers, seven corresponded to companies going public:ALL, CPFL Energia, Dasa, Gol, Grendene, Natura and Porto Seguro.

Other Profitability IndicatorsThe stock markets good performance in 2004 allowed the Ibovespa to beat its

all-time record as to the number of points 13 times during the course of the year. Itreached its all-time high on December 30, when it stood at 26,196 points.

The stock markets good performance was also reflected in the other indicatorscalculated by BOVESPA, which also ended the year well up: the Special CorporateGovernance Stock Index (IGC), by 37.9%; the Valor Bovespa Index (IVBX-2), by 36.4%;the Brazil Index (IBrX), by 29,8%; the Electric Power Index (IEE), by 5.6%, and theTelecommunications Sector Index (ITEL), by 3.6%.

Trading ProgressThe total volume traded on BOVESPA grew significantly, by no less than 48.6%,

in 2004, amounting to R$ 304.1 billion, the highest recorded in the history of theExchange.

In daily average terms, the financial turnover came to R$ 1,221.3 million. OnDecember 15, the total volume traded in a single day beat its all-time record,amounting to R$ 4,9 billion, 11.4% higher than the previous record as of June 16,1997.

The number of trades also grew significantly: 13,384,010 trades were carriedout in the course of the year, meaning a daily average of 53,751, 35.7% higher thanin 2003 (39,597 trades per day). As a result of this growth, the all-time record forthe number of trades was exceeded three times. The first time was on June 16 with92,579; the second was on October 13, when, for the first time in BOVESPAs history,the barrier of a 100,000 trades in a single day was exceeded, at 106,481; and thethird time was on December 15, when there were 121,379 trades with no problemconcerning registration.

The liquidity ratio, measured by the relation between the cash volume tradedand the market capitalization, increased from 0.29 in 2003 to 0.34 in 2004.

The cash market (round lot) accounted for 82.9% of the total volume traded onBOVESPA, coming to a daily average of R$ 1,012.4 million. Trading in this marketbeat its all-time record on December 15, amounting to R$ 3.7 billion, 48.0% higherthan the previous record, which took place on December 17, 2003.

The ten most actively-traded stocks on the exchange accounted for 49.5% of theamount traded on the cash market (round lot), against 53.5% the previous year,suggesting a reduction in the concentration of trading in 2004.

January 2005 9

Home BrokerLaunched at the end of March 1999, the trading system under which investors

send their orders directly to BOVESPAs electronic trading system has been makingremarkable progress in terms of the financial volume, the number of trades and ofinvestors. The average monthly volume, which was R$ 879.3 million in 2003 movedup to R$ 2,047.8 million in 2004, representing an increase of 132.9% in the period.The average number of trades and investors rose by 82.1 % and 79.3%, respectively,over 2003.

Transactions via the Home Broker accounted for 4.1% of the total volume tradedon BOVESPA during the year, emphasizing that they accounted for 5.5% in December.

Derivatives MarketsBOVESPAs derivatives markets, in line with the rise in the total volume traded,

also saw their trading increase.The stock options market, with a share of 6.2% of the total amount traded on

BOVESPA, came to R$ 18,938.7 million in 2004, 27.3% higher than in 2003.The options on indexes segment also rose during the year, recording a volume of

R$ 1,560.6 million, compared with R$ 1,325.7 million in 2003. Six thousand, fourhundred and fifty-one trades on index options were carried out, of which 5,274 werecall options and 1,177 were put options. On November 29, the options on indexesmarket traded R$ 115.7 million, exceeding by 163.0% the previous all-time tradingrecord, set on February 14, 2001.

In terms of the number of trades carried out on the options market, they rose by26.5% over 2003. The daily average number of trades went from 16,853 in 2003 to21,399 in 2004.

Forward MarketTrading on the forward market also rose during the year. The number of trades

rose from 108,427 in 2003 to 166,655 in 2004. The total financial value came to R$10,496.4 million, 62.9% more than in 2003.

Of the total number of trades carried out in this market, 56.4% were for periodsof up to 30 days, 29.3% were for periods of from 31 to 60 days and 14.3% were forperiods of longer than 60 days.

BOVESPA FIX and SOMAfixThe year 2004 was characterized by the resumption of the issue of debentures

and by the large number of FIDC issues. The number of securities registered forBOVESPA FIX and SOMAfix rose from 78 in 2003 to 147 in 2004, a rise of 88.5%. Asa result, the inventory available for trading amounted to R$ 26.1 billion, a 24.1%increase.

The volume traded in the secondary market in 2004 came to R$ 2,101.8 million,a rise of 361.5% over 2003, with an increase of 207.8% in the number of trades. Theaverage amount per trade was R$ 5.3 million.

In the light of the difficulty of interpreting the ways of calculating theremuneration of debentures, a financial calculator for debentures was made availableon the BOVESPA FIX website enabling the prices and rates of these securities to becalculated, giving amounts equivalent to the spreads, the clean price and the financial

January 2005 10

amount of offers or trades for T+0, T+1 or for retroactive dates, as the result. Inaddition, the calculator gives the main features of the debentures and the basis of thecalculation, enabling users to concentrate just on examining the rate and the risk ofthe investment.

Market CapitalizationThe market value of the BOVESPA listed companies came to R$ 904.9 billion in

December 2004, showing a rise of 33.7% over the same amount in December 2003.The companies making up the Ibovespa and the IBrX portfolios accounted for

70.9% and 81.3%, respectively, of the total amount of the market capitalization.The five business sectors with the highest market value in 2004 were: financial

institutions, at R$ 156.9 billion (17.3% of the total); oil and gas, at R$ 115.4 billion(12.8%); fixed line telephony, at R$ 104.9 billion (11.6%); mining, at R$ 92.2 billion(10.2%) and electric power, at R$ 86.6 billion (9.6%).

Investors SharesIndividuals, institutional and foreign investors increased their share of transactions

on BOVESPA during 2004. Foreign investors were noticeable, with 27.3% share inthe total volume traded, compared with 24.1% in 2003. Individuals went from ashare in the total volume traded of 26.2% in 2003 to 27.5% in 2004. Institutionalinvestors rose from 27.6% to 28.1%.

Financial institutions and public and private companies, on the other hand, sawa reduction in their share of BOVESPAs trading, since the former went from 18.0%in 2003 to 13.8% in 2004, and companies went from 3.7% to 3.0%.

The increase in foreign investors share provides evidence of the interest thatthese investors have in the Brazilian market, influenced chiefly by the countrysimproved economic indicators. Indeed, they recorded a net inflow of R$ 1,803.5 millionin 2004 - the result of purchases in the amount of R$ 83,288.0 million and sales inthe amount of R$ 81,484.5 million.

New Sectoral ClassificationBOVESPA introduced a new sectoral classification, in January, for companies

listed on the exchange, taking, chiefly, the types and the use of products and servicessold by the companies.

It should be emphasized that the introduction of this new classification did notcause any change to the make-up of the IEE and ITEL indices. The exchanges newsectoral classification can be found at the Internet address www.bovespa.com.br.

Market MakersLaunched in September 2003, Market Makers are institutions that operate in

promoting the liquidity of the assets to which they are accredited. So far, ten companiesalready have a Market Maker: ALL - Amrica Latina Logstica (gora Senior), CCR(Pactual), Celpe (Codepe), CPFL Energia (Pactual), Po de Acar (gora Senior), Ripasa(Pactual), Rossi Residencial (Fator Doria Atherino), Suzano Papel (gora Senior), SuzanoPetroqumica (gora Senior) and Unibanco (gora Senior).

The activities of Market Makers have shown encouraging results since theirinception, noting that, of the ten companies, six have seen both the daily average of

January 2005 11

their trading volume and the number of trades increase since the period before theMarket Makers started up.

In addition, two of these companies, Unibanco and Suzano Papel, began makingup the theoretical portfolio of the IBrX-50, as from September 2004, helped by workof the Market Maker in raising the liquidity of the shares.

In addition, continuing the program of implementing Market Makers for theassets traded under its trading systems, BOVESPA has prepared relevant rules andregulations for accreditation and the way Market Makers will act for fixed interestassets, which culminated in Resolution no. 300/204-CA, of July 20, 2004.

PIBB (Brazil Bovespa Index Securities)The shares of PIBB (PIBB11) - first index fund listed on an exchange in the Brazilian

market - started to be traded on BOVESPAs secondary market in July.The public issue of the shares in the PIBB reached a total of 25,284 individuals for

a retail demand of R$ 306.5 million. In all, 22,822,366 shares were sold for a totalamount of R$ 600,000,002.14.

Established in partnership with the BNDES, the PIBBs differential was theguarantee of repurchase by the BNDES for individual investors who invested up toR$ 25 thousand during the initial placement. Inspired by the American funds knownas ETF (Exchange Traded Funds), the PIBB reproduces the IBrX-50 portfolio, whichcombines the 50 most actively traded shares on the cash market, weighted by themarket value of the outstanding shares. With this set-up, the PIBB keeps up with theprofitability of the IBrX-50 which gives it the features of a diversified investmentand grants it the same trading conditions as equity assets, such as buying and sellingin the same day and their use as margin for other BOVESPA transactions.

Trading in the PIBB on BOVESPA has been quite encouraging, having attained -since the beginning of trading and up to December 30 - an average of 65 trades a dayand a daily average turnover of approximately R$ 3.3 million. During this period,the accumulated profitability of the PIBB was 31.0%.

Options on the Mini IbovespaIn order to increase the number of players and to produce new trading

opportunities, the Mini Bovespa Index was launched in August and, at the sametime, trading in options on this indicator was authorized.

The Mini Bovespa Index is practically identical to the Bovespa Index; the onlydifference lies in the fact that it is equivalent to 10% of the Ibovespa. Options on theMini Bovespa Index also retain the same features and ease of operation as options onthe Ibovespa. Three thousand and three contracts have already been traded, since itwas launched.

BOVESPA WHERE YOU AREBOVESPA WHERE YOU ARE is a program to popularize the stock market and its

purpose is to spread it to all layers of Brazilian society and to change the culture ofthe individual investors saving, nowadays chiefly concentrating on fixed rateinvestments. To do this, BOVESPA WHERE YOU ARE shows, in plain and simplelanguage, how the stock market operates, what trading is and how to trade, showingthat the stock market is accessible to the general public and attracting individuals to

January 2005 12

investment in equities, chiefly through collective forms of investment, such asinvestment clubs.

Since it was launched in 2002, more than ten modules have been introduced. It isworth emphasizing that overall, the program has met the needs of more than 174,000people, always seeking to be present, jointly with the Stockbrokers, in places wheremany people congregate. We can note that, since it was launched, there has beengrowth in individuals share of investment and in the share of investment clubs,which rose from 473 in December 2002 to 1,016 in December 2004.

Integration Agreement between BOVESPA and the Mexican Stock ExchangeIn November, the So Paulo Stock Exchange reached an agreement with the

Mexican Stock Exchange for a pilot plan to combine the Brazilian and Mexican capitalmarkets, the first step to connecting the Latin American markets.

The integration plan is based on the association of Stockbrokers in Brazil withthose in Mexico, known as Correspondent Stockbrokers, which will enable Braziliancustomers to buy and sell shares on the Mexican Stock Exchange and vice-versa.

Finally, 2004 was a year of recovery for the Brazilian stock market. Companiesagain raised money by floating shares on the market; the daily average number oftrades attained unprecedented levels, the volume traded enjoyed significant growthand records were beaten.

All this was the result of an improvement in the countrys economic situationand in the ongoing work of renewing and modernizing BOVESPAs systems andprocesses.