RPT-Analysis-Brazilian stock issuance heralds stronger economy

* Wave of equity offerings sign of capital market maturity

* Offerings signal confidence in Brazil's economy, markets

* Brazil's BRIC inclusion gains merit after years of doubt (Repeats to add dropped word "doesn't" in first sentence)

By Herbert Lash

NEW YORK, Sept 4 (Reuters) - Suddenly it seems a day doesn't go by that a Brazilian company doesn't announce plans to sell new stock, a sign of increasing confidence in Brazil's capital markets and the country's growth prospects.

The recent surge in stock offerings is a strong indication that corporate Brazil believes the worst of the nation's downturn is over and that the outlook for the economy, which is expected to grow about 4.5 percent in 2010, bodes well.

Everything seems to be falling into place for Brazil, whose performance often lagged its promise. Low growth earlier this decade led many people to question whether Brazil's inclusion with Russia, India and China in the high-growth "BRIC" group of countries was merited.

"It's incredible how things evolve. Because the 'B' was a question mark barely 2-1/2, three years ago. And now look at this," said Alberto Bernal, an analyst at Bulltick Capital Markets.

"The evidence is very, very difficult for somebody who wants to find negatives on the latest performance of what I'm seeing right now in this country," said Bernal in a telephone interview from Sao Paulo.

Brazil can lay claim to one of the world's biggest initial public offerings of the past year, when an IPO by VisaNet VNET3.SA, the country's No. 1 credit card processing company, in late June opened the floodgates for stock sales.

Including VisaNet's 8.4 billion reais ($4.3 billion) IPO, Brazilian companies have sold 17.6 billion reais of new shares since then, and more companies are lining up to sell stock.

The new equity wave, while promising, is unlikely to match the IPO boom in 2007, when 52.3 billion reais of new stock was issued, Brazilian securities regulator Maria Helena Santana said last week. But the increase in offerings is a sign that Brazil has handled the global crisis well, she told Reuters.

The Brazilian unit of Spain's Banco Santander SA (SAN.MC)(STD.N) and Brazil's Cetip, the largest clearing house in Latin America, announced IPOs this week.

Also this week Brazilian realty companies Rossi Residencial (RSID3.SA) and PDG Realty (PDGR3.SA) announced plans to soon sell a combined 1.4 billion reais in new shares.

And low-cost carrier Gol Linhas Aereas Inteligentes SA (GOLL4.SA)(GOL.N) said two weeks ago it plans to raise between 550 million and 650 million reais in a global offering.

The stock offerings will deepen Brazil's capital markets and help Brazilian pension funds, which need an expanded investment universe as government interest rates fall to 8.75 percent -- high for the world but a record low for Brazil.

"Significant under-exposure by Brazilian domestic and global investors alike means that there will be solid demand for more offerings out of Brazil," said Claudio Brocado, an analyst with Batterymarch Financial Management Inc in Boston.

Brazil's capital markets are relatively underdeveloped by global standards. Ten stocks accounted for more than of half the trading volume in equities last year, and two companies -- Petroleo Brasileiro SA (PETR4.SA)(PBR.N) and Vale (VALE5.SA)(RIO.N) -- together hold a weighting of more than one-third of the Bovespa index .BVSP, the main stock benchmark in Brazil.

Brazil's growth prospects look so good that Brazil is a major consideration of multinational corporations looking to expand, Bernal said. "Brazil is always on top of the list."

Santander, the largest bank in the euro zone and a leading financial group across the globe, called Brazil one of the world's most attractive markets given its growth potential and low penetration rate of banking products and services.

Santander, which focuses on the country's mid- and upper-income earners, said of its 99.1 million account holders in Brazil at the end of June, only 20 percent had personal loans and only 60 percent possessed a credit card.

That low credit penetration and the boost leverage can provide an economy makes Brazil attractive not only for Santander, but for other companies, as well as for investors.

Even though the global crisis slammed Brazilian asset prices late last year and early in 2009, the economy suffered only a mild slump during the fourth quarter of 2008 and the first quarter of this year. Internal demand kept the economy in relatively good shape.

"One of the things that is playing out for the moment is the relative strength of the Brazilian consumer within the economy," said Nick Robinson, an investment manager at Aberdeen Asset Managers Ltd in London, which oversees $12 billion in emerging market equities.

With Brazil's economy doing better than other countries around the world, "it may be breaking that myth that the economy is dominated by exports and reliance on commodity prices to grow," said Robinson, who will set up an Aberdeen research office in Sao Paulo at the end of October.

Contrary to what many foreign investors believe, exports accounted for less than 13 percent of Brazilian gross domestic product the past two years. (Editing by Leslie Adler)