^BVSP - IBOVESPA

Sao Paolo - Sao Paolo Delayed price. Currency in BRL
96,764.85
+529.89 (+0.55%)
At close: 5:19PM BRT
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Previous close96,234.96
Open96,236.97
Volume0
Day's range95,803.32 - 96,764.87
52-week range74,275.00 - 106,650.00
Avg. volume4,371,395
  • A Long, Lost Year Forecast for Brazil’s World-Lagging Stocks
    Bloomberg

    A Long, Lost Year Forecast for Brazil’s World-Lagging Stocks

    (Bloomberg) -- For investors in Brazilian stocks, making even in 2020 may be a long shot.With the Ibovespa index ending the first half down 18%, strategists see limited room for gains in coming months. On average, they predict the benchmark will finish the year at 100,000, a Bloomberg survey showed. While that represents a 5% advance from where it stood at the end of June, it’d be the smallest gain for any July-December period in five years. Moreover, it means the market would be still stuck with a loss for the year.The rally that started in March and lifted the Ibovespa 50% is expected to lose some steam as Latin America’s largest economy, where the virus isn’t slowing down, faces a mounting challenge to balance its fiscal budget. While the central bank has cut interest rates to record lows and locals continued to flock to equities in search of better returns, foreigners remain wary.With the Ibovespa down 37% in U.S. dollar terms this year, Brazil is the world’s second-worst performing market behind Colombia’s Colcap.“On a scale of zero to 10, with 10 being most bullish, we’re six on Brazil right now,” Santander strategist Daniel Gewehr said in a phone interview. “There’s room for gains, but upside potential isn’t that big.”One concern cited by Gewehr is the mismatch in the expected growth rate between corporate earnings and the economy. According to his calculations, Brazil’s gross domestic product is forecast to contract 1% annually over the next two years. By contrast, profits are estimated to grow at a pace of 4.9% over the period. “Something’s gotta give,” he said.Trading 30 times 2020 earnings, the Ibovespa looks expensive. But when valued at 2021 earnings, stocks look much more reasonable with a multiple of 12. The index rose 1.2% to 96,203 in Sao Paulo Wednesday, with lenders Itau Unibanco Holding SA and Banco Bradesco SA leading gains.With Brazil posting the world’s second-biggest number of total Covid-19 infections, investors continue to monitor whether there might be any setbacks to the country’s gradual economic reopening.“Uncertainty remains high and the market is still trading based on how the Covid-19 situation evolves,” said Emy Shayo, Latin America equity strategist at JPMorgan Chase & Co.Consistent with global efforts to stem the economic fallout from the virus outbreak, Brazil’s central bank has lowered its key interest rate to 2.25% and said additional easing may be in store.Lower yields have helped encourage local investors to favor stocks over fixed income. Their interest in equities grew in March even as the market suffered the worst month since 1998 and at one point trading was halted almost every day. In May, retail accounts registered with Brazil’s stock exchange B3 SA totaled about 2.5 million, up from 1.7 million at the end of last year.In contrast, foreign demand has waned. To some, that’s good news because it means unspent buying power should sentiment start to shift. According to B3 data compiled by Bloomberg, offshore investors have pulled about 76.5 billion reais ($14 billion) from local stocks since the beginning of the year, excluding inflows through equity deals.“Foreigners are certainly underweight on Brazil from a broad perspective and I would expect to see more foreign buying of Brazil stocks over the next few months,” said Caesar Maasry, a New York-based emerging-market strategist at Goldman Sachs.For the equity advance to take hold in the market over the long term, economic reforms that have been derailed amid the health crisis need to regain traction, most strategists say. Last week, Brazil’s Senate approved the sanitation bill, which facilitates private investment in the sector. But other market-friendly measures -- including tax reform -- are considered unlikely in the second half.“The debate is back to the table, but we still don’t have conviction that a series of reforms will take place this year,” said Bank of America’s Latin America equity strategist David Beker.To fight the Covid-19 pandemic, Brazil has boosted public expenditures, worsening its fiscal outlook. The Economy Ministry estimates the country’s debt-to-GDP ratio will reach 93.5% by the end of the year. Uncontrolled fiscal deterioration is the top Brazil risk, according to a recent BofA survey of fund managers.While the market outlook is less than stellar, investors may be better off picking the right stocks. Morgan Stanley strategists led by Guilherme Paiva recommended Banco BTG Pactual SA, which is ramping up its digital venture, and B3. JPMorgan advised investors to rotate from recent winners to stocks that haven’t done well or trade below book value, such as state-owned lender Banco do Brasil SA and food retailer Cia Brasileira de Distribuicao.“In terms of fundamentals, there’s little room for more gains,” said Frederico Sampaio, the chief investment officer for equity at Franklin Templeton’s Brazil unit. “Of course you can’t fight against flows, but I believe the safety margin is gone.”(Adds Wednesday’s trading in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Fund Tycoon Says He Ran Out of Cash Betting on Stocks in Brazil
    Bloomberg

    Fund Tycoon Says He Ran Out of Cash Betting on Stocks in Brazil

    (Bloomberg) -- Luiz Alves Paes de Barros made his fortune by buying in Brazil when everyone else was bailing. This time, he ran out of money doing it.The 72-year-old founder of Alaska Investimentos Ltda., whose family fund was briefly worth $1 billion at the start of the year, embarked on a stock buying spree late in the first quarter as markets worldwide reeled and Brazil’s benchmark Ibovespa index tumbled as much as 58% year-to-date in dollar terms. While Barros acknowledges now that maybe he got in “a little earlier” than he should have, he says it hasn’t changed his appetite for under-appreciated Brazilian assets.After cash on hand ran out sometime around the second half of March, “I got some extra money from a bond that matured and started it all over again,” he said in a interview from Sao Paulo.Betting on the underdog has become a habit for Barros, who made a name for himself in Brazil’s financial circles fishing for bottom-of-the-barrel valuations like Magazine Luiza SA. The battered retailer became one of Alaska’s biggest holdings in late 2015 when it was still a penny stock -- and then rallied 50,000% since its all-time low in December of that year. Bets like that helped Barros and his two lieutenants, Henrique Bredda and Ney Miyamoto, turn the Alaska Black Master fund into one of the nation’s top performers in five years.Then came the virus lock-down, and the market chaos that ensued.The Tides TurnNow, the fund is down 50% since the start of the year, under-performing 99% of its peers in Brazil, according to data compiled by Bloomberg. In March, it had the worst month since its 2010 inception. Wrong-way leveraged bets on interest rates and the Brazilian currency are to blame, as well as Brazil’s stock tumble.While markets like the U.S. have already recovered the bulk of their losses, a combination of political turmoil and fiscal concerns are holding Brazil back. The Ibovespa is still down 33% year-to-date in dollar terms, the world’s third-biggest loser among major indexes.Barros, whose family owned sugarcane mills, previously traded commodities and was a partner of well-known fund manager Luis Stuhlberger.Barros’s own money, invested in the Alaska Poland fund -- of which he, his wife and son are the three single shareholders -- took a dive from a mid-January peak of 4.25 billion reais, or a little more than $1 billion at the exchange rate at the time, to 3.2 billion reais, now worth about $650 million after the real tumbled, according to data compiled by Bloomberg. It’s the biggest hit he’s ever taken to his personal wealth since the Poland fund’s inception.Still, Barros says he’s not shaken. There’s opportunity in upheaval.“There’s no hidden bogeyman this time,” he said. Since the reason for the crisis is clear, he says it’s easier to act, and he’s still buying, albeit in a way that gives him more liquidity. “The world will lose a year with the pandemic, and I don’t think that is a big problem.”The ‘Anonymous Billionaire’Once known in Brazil financial circles as the “anonymous billionaire,” Barros is incognito no longer: About five years after Alaska Investimentos started investing other people’s money, the Sao Paulo-based firm has risen in the ranks in recent years to become one of the nation’s most popular asset managers, with over 200,000 investors and 12.8 billion reais in assets under management. A rare public lecture by Barros last year drew 10,000 attendees. Bredda, who manages the Alaska Black fund, is something of a guru on the so-called FinTwit scene, with more than 156,000 Twitter followers.Despite Brazil’s brutal tumble, Barros is confident stocks will recover, although he acknowledges the recent rocketship rebound may have gone too far, too fast.“The crisis will still last longer -- it isn’t over yet,” Barros said in a recent live broadcast, arguing Brazilian stocks are due for some bumps in the roads after surging 50% since the bear-market bottom in March. “No one should be sad about that. Falling a bit now is part of the game.”The firm is betting on a full-recovery as early as next year.“We’re assembling structures in our funds that can give us a lot of money if the Brazilian market recovers to its record high by mid-2022,” Bredda said in the interview.Barros, who during the Zoom interview used a superimposed background of green tropical leaves, joked to his partner: “You’re obligated to be a little pessimistic. Me? I think by mid-2021 we’ll be past the all-time high. But that’s why I don’t talk publicly that much.”The Alaska Black fund is already up 32% in the past month. Firms like iron-ore producer Vale SA or pulpmaker Suzano SA will see results recovering much faster than the economy, Bredda said.With coronavirus cases exploding and Brazil poised to post its worst economic contraction in history, it’s hard to reconcile Alaska’s optimism with reality. On the other hand, U.S. markets are also behaving as if the virus pandemic that grounded the economy to a standstill never happened.Brazil’s political mess and fiscal woes, Bredda argued, “have nothing to do with the stock market.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Coronavirus thumps Brazil, prompting nationwide cries of 'Bolsonaro Out!'
    Reuters

    Coronavirus thumps Brazil, prompting nationwide cries of 'Bolsonaro Out!'

    RIO DE JANEIRO/SAO PAULO (Reuters) - The coronavirus outbreak hammered Brazil on Wednesday, crushing local markets, infecting more members of the country's political elite and prompting loud protests against President Jair Bolsonaro, whose son waded into a diplomatic spat with China. Bolsonaro's national security adviser, the mines and energy minister and the head of the Senate all tested positive for the virus on Wednesday, as the death toll rose to four dead with 428 people infected. On Wednesday night, Brazil erupted to the sound of banging pots and pans and shouts of "Bolsonaro out!" with housebound protesters expressing their anger toward the president.

  • Reuters - UK Focus

    EMERGING MARKETS-Chile peso at new low on slow mining data, unrest; other Latam FX drop too

    Chile's peso slid 1.5% to 737.53 to the dollar, an all-time low and stocks tumbled 3.1% to a eight-week trough. The country's manufacturing production dropped in September from a year ago amid a decrease in mining production, government data showed. Analysts worry about deteriorating economic activity in Chile - the world's biggest producer of copper as a recent political crisis has seen union workers at BHP's Escondida copper miner go on strike.

  • Stocks to rise as rate cuts beat back trade worries for now: Reuters poll
    Reuters

    Stocks to rise as rate cuts beat back trade worries for now: Reuters poll

    World stocks will keep rising over the coming year, according to the latest Reuters polls of strategists, but wild gyrations are likely in the lift from expected central bank policy easing and drag from developments in the U.S.-China trade war. Fears of a global economic slowdown as the world's largest economies become more deeply locked in a tit-for-tat trade tariff war unnerved world stocks last year, with all the indexes polled by Reuters, barring India and Brazil, in the red in 2018. While stocks have recovered globally so far this year, the latest polls of nearly 300 equity strategists showed nine of the 17 indexes polled on would not recoup last year's heavy losses by end-2019.

  • World stocks to rise as rate cuts beat back trade worries for now - Reuters poll
    Reuters

    World stocks to rise as rate cuts beat back trade worries for now - Reuters poll

    World stocks will keep rising over the coming year, according to the latest Reuters polls of strategists, but wild gyrations are likely in the lift from expected central bank policy easing and drag from developments in the U.S.-China trade war. Fears of a global economic slowdown as the world's largest economies become more deeply locked in a tit-for-tat trade tariff war unnerved world stocks last year, with all the indexes polled by Reuters, barring India and Brazil, in the red in 2018. While stocks have recovered globally so far this year, the latest polls of nearly 300 equity strategists showed nine of the 17 indexes polled on would not recoup last year's heavy losses by end-2019.

  • Reuters - UK Focus

    GLOBAL MARKETS-Stocks, oil plunge on growing signs of global slowdown

    Equity markets tanked and oil prices fell sharply on Wednesday after a closely watched bond indicator pointed to the growing risk of a U.S. recession that was heightened by data showing Germany's economy in contraction and China's worsening. Yields on two-year U.S. Treasury notes rose above the 10-year yield for the first time since 2007, a metric known as an inversion that is widely seen as a classic recession signal.

  • Reuters

    Brazil lower house pension reform vote hits delay as savings cut

    Brazil's lower house of Congress may not vote on a landmark pension reform bill until August, leaders said on Friday, as intense negotiation over amendments delayed the process and reduced savings derived from the overhaul. The government's Pension and Labor Secretary Rogerio Marinho said that after amendments the bill is expected to save close to 900 billion reais ($240 billion) over 10 years if approved, down from the more than 1 trillion reais in savings the government initially sought. The revision to the costly pension system is President Jair Bolsonaro's flagship policy for cutting government spending and restoring health to public finances.

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