Sept. 17 (Bloomberg) -- Brazil’s stock market will attract “much more” money as most global investors missed out on the Bovespa index’s rally this year by holding on to cash or fixed income securities, said Ilan Ryfer, partner at Sao Paulo-based Credit Suisse Hedging-Griffo.

“Brazil is in style for foreigners,” said Ryfer, who helps oversee the equivalent of about $20 billion at Hedging Griffo, the manager of Brazil’s biggest hedge fund. “Everyone thinks it’s a bull market again and the party’s back. Investors have short memories.”

The Bovespa stock index has jumped 107 percent this year in dollar terms on the prospect that record-low interest rates and rebounding commodity prices will boost corporate earnings.

“There’s still much more money to come in,” said Ryfer in an interview after speaking at a Latin American fund conference in Sao Paulo. “People were sitting on their elbows during this gain, and now their elbows are hurting.”

The Bovespa sank a record 41 percent last year as Latin America’s biggest economy entered its first recession since 2003. The decline halted a five-year bull market where the gauge had an average annual return of 41 percent.

Zurich-based Credit Suisse Group bought a majority stake in Hedging-Griffo for 358 million Swiss francs ($294 million) in cash in December 2006. The firm’s 7.3 billion-real HG Verde Master FI Multimercado hedge fund outperformed 93 percent of its peers this year, according to Bloomberg data.

Commodities Demand

Michael Power, who oversees $60 billion at Investec Asset Management in Cape Town, South Africa, said the company has been adding to holdings in countries such as Brazil on the prospect that demand for its iron ore and oil exports will grow.

Brazil, Australia, Chile, Peru and some African nations will lead gains for equities as demand from China surges, he said in an interview at the fund conference.

“These are the countries that will do best in the near- term because their consumers are increasingly desperate to buy their products,” Power said. “China just has to have this stuff.”

Commodity demand in China, the largest metals user, “is back on track in a very big way,” as the world economy accelerates, CLSA Research Ltd. said yesterday in a report.

Brazilian companies are lining up to sell stock after this year’s rally. At least 12 companies filed to sell equity since July 31, including Gol Linhas Aereas Inteligentes SA, the nation’s second-biggest airline, and Rossi Residencial SA, the sixth-largest homebuilder.

‘Taking Profits’

Itau Unibanco Holding SA, Brazil’s biggest private bank, recommends “taking profits” because these offerings may dilute demand for Brazilian stocks.

“The growing number of equity offerings may cap the market’s performance in the short term,” Itau strategist Carlos Constantini wrote in a note to clients today. “We are assuming a slightly more defensive stance on our portfolio, reducing beta and increasing exposure to the utilities sector.”

U.S. Federal Reserve Chairman Ben Bernanke said this week that the worst U.S. recession since the 1930s has probably ended, yet growth may not be strong enough to quickly cut the unemployment rate.

Brazil’s economy has shown resilience, growing 1.9 percent in the second quarter from the previous three months, as rising domestic consumer spending and demand pulled the nation out of the recession. Jobs were created in August at the fastest pace in 11 months, the Labor Ministry said yesterday.

“People are looking to add risk and the fundamentals in Brazil are better than most other places,” said Ryfer.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net

Last Updated: September 17, 2009 15:25 EDT