Corporate money is flowing into Brazil to take advantage of one of the greatest emerging consumer market opportunities of all time.

In Brazil, a $40 billion telecom industry is still buzzing with inbound M&A activity lately. Portugal Telecom signed an agreement to buy 22.38% stake in Brazil’s largest fixed-line telecom operator, Tele Norte Leste Participacoes SA (NYSE:TNE), for BRL 8.32 billion (or $4.98 billion). Japan-based network services provider, NTT Data Corp., stated that it will spend JPY 300 billion (or $3.7 billion) on acquisitions, with companies having a strong presence in Brazil being the primary targets. Brazil recorded foreign direct investment of $15.4 billion, against expectations of just $5 billion in December 2010. The country’s strong domestic consumption story should continue to attract foreign capital and spur economic development over the next few years.

Shell's venture with Cosan will mark the biggest-ever foray into biofuels by an oil major. The venture, which would create the No. 3 fuel distributor in Latin America's largest country, underscores cane ethanol's lure as an alternative to gasoline. The 50-50 joint venture, with almost 4,500 filling stations nationwide, will better position Cosan and Shell to compete with the two top players on the Brazilian fuel distribution market, state oil giant Petrobras and Ipiranga, a unit of Brazil's Grupo Ultra. Brazil's largest sugar and ethanol group, Cosan, said in a preliminary earnings report that quarterly net operating revenue rose 24 percent from a year earlier, boosted by strong sugar and ethanol prices and sales.

Over the last week, the top performers in our newsletter service were:

• NII Holdings Inc.(NasdaqGS: NIHD) +6.7%
• Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) +4.9%
• Petrobras Energia Participaciones S.A. (NYSE:PZE) +4.9%
• Telefonica S.A. (NYSE: TEF) +4.3%
• Banco Santander (NYSE:STD) +3.8%

Investors are nervously watching central banks of emerging economies. Given that the Latin American economies will need to tame inflation by raising interest rates in the near future, their governments will have to devise new measures to deal with currency appreciation from capital inflows ($203 billion in 2010, as per the World Bank).

Chile’s central bank maintained the key benchmark interest rate at 3.25%, following seven consecutive hikes. The decision is aimed at restricting the scope for further appreciation in the export-oriented economy’s currency. Although the central bank raised its 2011 inflation expectations to 3.6% (3.2%, previously), I do not view inflationary pressures in Chile as an immediate cause for alarm.

As commodities prices cool some of the pressure for rate increases could be lessened short-term. But can you expect copper to fall when the fundamental demand is still so strong?

Speaking of fundamentals, the top performers in our newsletter service over the last week were:

• Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) +17.5%
• Banco Santander (NYSE:STD) +13.6%
• Repsol YPF, S.A. (NYSE:REP) +12.5%
• Companhia Paranaense de Energia (NYSE:ELP) +8.1%
• Tim Participacoes S.A. (NYSE:TSU) +7.3%

Brazil uncovered a substantial amount of “black gold” in 2010.

In its backyard it has discovered that three of its offshore oilfields (Libra, Tupi and Iracema) hold oil and gas reserves in excess of 23 billion barrels of oil equiva-lent (bboe). The country reported record oil production in November (2.089 million barrels per day). I expect Brazil to emerge as the premier destination for energy exploration in the world, given its ample off-shore re-serves and the government’s tendency to balance the need for state ownership of energy assets with investor-friendly policies.

So, will the country be able to fund its infrastructure development by generating higher tax re-ceipts from the increased exports of oil through the state-owned Petroleo Brasileiro SA (NYSE:PBR)?

Given that “PetroBras” accounts for over 12% of Brazil’s benchmark equity (BOVESPA) index, a stellar operating performance from the company will most likely also have a positive rub-off on the overall stock markets over the medium-term.

Top performers in our coverage universe over the last week were:

• Petroleo Brasileiro S.A. (NYSE:PBR) +9.6%
• Petrobras Energia Participaciones S.A. (NYSE:PZE) +9.1%
• Gafisa S.A.(NYSE:GFA) +5.3%
• CPFL Energia S.A. (NYSE:CPL) +4.7%
• Braskem (NYSE:BAK) +4.1%

Brazil's building boom in continuing.

With an eye on hosting upcoming global sporting events such as the 2014 FIFA World Cup and 2016 Olympic Games in Rio, the Brazilian government announced several measures to encourage infrastructure investments. The measures include funding to purchase corporate bonds, massive tax cuts to investors in bonds used to raise funds for infrastructure projects and a partial rollback of taxes on capital inflow from overseas. Brazil’s investment in its infrastructure has lagged that of emerging market leaders. In terms of investment-to-GDP ratio, Brazil averaged 17% over the past five years far less than China (44%), India (38%) and Russia (24%).

Obviously this higher investment will have an impact on the Brazilian economy. Stay tuned to see how Brazil's government finances this relative to its current revenue stream.

Top performers in our coverage universe over the last week were:

• NII Holdings (NasdaqGS: NIHD) +8.9%
• Braskem (NYSE:BAK) +6.3%
• Companhia de Saneamento Basico do Estado de São Paulo (NYSE:SBS) +4.9%
• Companhia de Bebidas das Americas (NYSE:ABV) +4.8%
• Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) +4.3%