The Brazilian Stock Market in the Pre-Ibovespa Era

Abstract

The paper reports the availability of equity market and government bond indices for the 1950-1967 in Brazil, before the introduction of the Bovespa index. Nominal monthly returns are computed, and the historical market risk premium is determined. A 1.86% monthly average is obtained, which compares to 1.69% per month for the period from January, 1968 to October, 2013. The rates of return of both market segments are then adjusted for the change in the General Price Index – Domestic Availability (IGP-DI). It is observed that neither stocks nor government bonds provided sufficient protection against inflation. The paper’s main contribution to the literature, however, is the creation of the two index series, adding over 17 years of data to the information commonly used in the analysis of Brazilian capital markets.