Economist Krugman says he plans to sell some Brazilian investments

“I am seeking to get out because of what's happening,” Krugman told reporters in Sao Paulo. “Not that I see a crisis, but people seem to be loving it too much.”

Brazilian stocks and the currency surged this year as Latin America's biggest economy rebounded from its first recession since 2003. The benchmark Bovespa stock index has gained 83 percent, while the real has rallied 35 percent against the dollar, the most among the 16 most-traded currencies.

Brazil's economy is “doing well,” Krugman said. “It's not the same as to say it will become the economic superpower next year. Markets are reacting as if it will.”

Economists forecast Brazil's gross domestic product will grow 5 percent in 2010, according to a central bank survey released on Nov. 23. Banco Bradesco SA, the second-largest non- government bank, estimates growth may accelerate to 6.1 percent next year as record-low interest rates boost consumer demand and commodity exports to emerging markets such as China increase, chief economist Octavio de Barros said Nov. 26.

Brazilian shares are no longer cheap compared with their emerging-market rivals after a rally that was bolstered by an investment-grade rating from Moody's Investors Service in September, Banco Itau SA Asset Management, the nation's second-biggest money manager, said this week.

The Bovespa index trades at 17.08 times estimated earnings, compared with 16.4 times for the MSCI Emerging Markets Index, according to Bloomberg data.

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