In late 2002, I accidentally rubbed shoulders with Brazilian President Luiz Inácio Lula da Silva at the National Press Club in Washington. Lula, as he is commonly known, had just won the election and was visiting the United States for talks with then-President Bush.

Pre-election investor panic
When it became clear that Lula was about to win the election, a massive sell-off occurred in the Brazilian sovereign bond market. Investors had been dumping bonds even before the election for fear of default, as his leftist policies were largely seen as contrary to the economically successful reformist agenda of the previous right-wing government.

It was quite a drama -- spreads on Brazilian sovereign bond yields over comparable U.S. Treasury yields skyrocketed above 20%. No matter how many times Lula repeated that he would not turn back on the successful policies of the previous government, investors did not appear to want to listen.

At the time of the NPC luncheon, things had already quieted on the economic front and the Brazilian bond market had begun to recover, but there were still many suspicions about Lula. The place was packed. Speaking in Portuguese through a translator, Lula came off as a charismatic orator with a sense of humor. When asked about the relationship of his political party with the Communist Party of China, he smiled and said that if a close relationship with China is good for the United States, it must also be good for Brazil.

He couldn't have said it better
Recently, the Chinese have been strategically investing in Brazil at a time when commodity prices are depressed. It's a simple formula and a clear symbiotic relationship: Brazil has the resources, and China has the money to develop those resources. For instance, the Chinese provided a $10 billion loan to Brazil's main oil company, Petrobras (NYSE:PBR), to help it develop its deep-sea oil finds.

This project in particular is very difficult -- and costly -- to develop, and it's not economical at current oil prices. But the Chinese aren't thinking about what oil costs this year or next; they want to lock in resources for 2015 and beyond. Since there have been no major oil finds in easy-to-get places, deep-sea discoveries like those owned by Petrobras will get financing, even if they don't make sense at the present oil price level.

The U.S. has an interest, too
ExxonMobil (NYSE:XOM) and the smaller Hess (NYSE:HES) are also active in Brazil's deep-sea oil. Both own 40% shares of another Brazilian offshore oilfield, which made headlines in 2007 with potential reserves of 10 billion barrels.

Exxon CEO Rex Tillerson has been very vocal in trying to manage expectations. He has publicly stated that the Brazilian field will take years to begin producing, and that the technical challenges are numerous. Given that Exxon's production exceeds that of most OPEC member states, it's reasonable to take Tillerson at his word.

Exxon's management has faced criticism over the years for not replacing reserves at a more aggressive pace. I always believed that this was due to the lack of easy reserves to be had. Exxon did try to buy a stake in now-defunct Yukos, but that was expeditiously prevented by the Russian government, which led to Yukos' bankruptcy. With the Brazilian oil fields, the problem is one of technology, not politics. Brazil may get lumped in with the rest of the famous "BRIC" countries -- Brazil, Russia, India, and China -- but at least compared to Russia, foreign investors get a lot better treatment.

A broader approach
For those seeking broad, low-cost exposure to the Brazilian stock market, one option is the iShares MSCI Brazil Index (NYSE:EWZ) exchange-traded fund. Be warned, however, that about 25% of the fund is concentrated in Petrobras, and another 16%-plus goes to Vale (NYSE:VALE), the iron ore and nickel mining giant. Itau Unibanco (NYSE:ITU) and Banco Bradesco (NYSE:BBD) round out the top holdings. Despite the concentration among just a few stocks, fund shareholders also get stakes in some other interesting companies that might be too risky for buy-and-hold investors on their own.

The real deal
Lula gave a brilliant speech at the National Press Club that day, but I still wondered if he wasn't just telling people what they wanted to hear. When the speech was over, he left the podium and headed straight toward the exit next to me. Before you knew it, Lula was standing to my right with a couple dozen Brazilian fans who swarmed around us and began taking pictures. He managed to say "hi" and "sorry" as his admirers boxed me in. The Brazilians loved him.

He left me with a great impression of a down-to-earth guy. Given Brazil's economic performance since he took over, I can say that in this case, the first impression was the right one.

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Fool contributor Ivan Martchev does not own shares in any of the companies in this story. Petrobras is a Motley Fool Income Investor recommendation. The Motley Fool has a disclosure policy.