|Day's Range||103,711.71 - 104,453.09|
|52 Week Range||74,275.00 - 106,650.00|
(Bloomberg) -- Brazilian stocks have extended their year-to-date gain to about 20% on renewed optimism that Latin America’s largest economy will finally overhaul its heavily indebted social security system. But the rally that has pushed the market to record highs still may have some juice left.The benchmark Ibovespa index may climb 11% from current levels to about 115,000 by the end of 2019, according to the average forecast of 10 strategists surveyed by Bloomberg. Their targets range from 105,000 to 123,000, implying an increase of as much as 18%. That would mark the fourth year of double-digit gains for Brazilian stocks.Reforming pensions should allow Brazil’s central bank to reduce the benchmark interest rate below the current, historically low 6.5%, pushing more funds into the local stock market, strategists say. While the domestic swap rates curve is pricing in an easing cycle of 108 basis point until the end of the year, some of the nation’s fund managers and economists see room for the Selic rate to reach 5%.“A strong fiscal anchor will likely open room for deeper interest rate cuts,” Bradesco BBI analysts led by Andre Carvalho wrote in a July 10 report, raising their target for the Ibovespa to 122,000 from 116,000. “Low interest rates should help boost the capital markets and M&A activities, as well as reduce financial expenses and increase the attractiveness of bond-like stocks,” Carvalho said.Bank of America has reiterated its overweight rating for Brazilian stocks in its Latin American portfolio, seeing the Ibovespa at 120,000 in the end of this year. “Flows into equities should keep supporting the market,” BofA’s Latin America equity strategist David Beker wrote in a note.Passing pension reform is also expected to unlock a long-awaited rebound in Brazil’s economy. Since the beginning of the year, economists have been lowering their estimates for gross domestic product in 2019, as doubts about the country’s fiscal outlook have kept investments on hold.Here’s a list of strategists’ top picks in Brazil:Bradesco BBIBanco do Brasil SA, Itau Unibanco Holding SA, B3 SA, CVC Brasil Operadora e Agencia de Viagens SA, Lojas Renner SA, Energisa SA, Cia de Saneamento Basico do Estado de Sao Paulo, Vale SA, Gerdau SA and Petroleo Brasileiro SABTG PactualPetroleo Brasileiro SA, Localiza Rent a Car SA, Banco Bradesco SA, Lojas Renner SA, Rumo SA, Cosan SA, Oi SA, Ambev SA, JBS S and Totvs SAItau BBABanco do Brasil SA, Banco Bradesco SA, Cyrela Brazil Realty SA, Cia de Saneamento de Minas Gerais, Kroton Educacional SA, Rumo SA, Petroleo Brasileiro SA, Multiplan Empreendimentos Imobiliarios SA, Vale SA and Azul SAJPMorganBanco Bradesco SA, IRB Brasil Resseguros, Cia Brasileira de Distribuicao, Vale SA, Petroleo Brasileiro SA, Rumo SA, Randon SA and Cyrela Brazil Realty SASafraItau Unibanco Holding SA, Banco Bradesco SA, Banco do Estado do Rio Grande do Sul SA, Banco do Brasil SA, B3 SA, Cia Brasileira de Distribuicao, Localiza Rent a Car SA, Vale SA, Bradespar SA, Cia Siderurgica Nacional SA, Petrobras Distribuidora SA, Telefonica Brasil SA, Rumo SA, Energisa SA and EZ Tec Empreendimentos e Participacoes SATo contact the reporter on this story: Vinícius Andrade in São Paulo at firstname.lastname@example.orgTo contact the editors responsible for this story: Brad Olesen at email@example.com, Scott Schnipper, Richard RichtmyerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Most Latin American currencies extended gains on Friday after dovish signals from the U.S. Federal Reserve, with the Brazilian real holding at over three-month highs as investors welcomed progress in the government's pension reform bill. Brazil's markets have surged in recent days on prospects for the pension system overhaul, while signals from the Fed about potential interest rate cuts helped capital inflows into risky, emerging market assets. Speaker Rodrigo Maia said the lower house will try to conclude voting before the break for recess on July 18.
MSCI's Latin American currencies moved o.6% higher in line with emerging market peers as expectations of an interest rate cut by the Fed bodes well for developing market assets. The Mexican peso, which slid following the finance minister's abrupt resignation on Tuesday, gained 0.3%, but overhangs regarding the country's fiscal status kept investors nervous. All five of the Mexican central bank's board members agreed the slowdown in Mexico's economy had been larger than anticipated, with "signs of weakness" in the second quarter, minutes from the June 27 monetary policy meeting showed on Thursday.
The Brazilian real jumped 0.4%, its fourth straight day of gains that took the currency to over a four-month high, although the Bovespa stock index retreated from a record high set in the previous session. Brazil's markets have rallied this week as investors draw comfort from progress in the government's efforts to overhaul the pension system, a cornerstone of President Jair Bolsonaro's economic agenda aimed at saving the public purse around 1 trillion reais ($263 billion) over the next decade. House Speaker Rodrigo Maia said he hoped the complete bill could be put to a second, final vote by Friday or early Saturday.
Regional currencies lost between 0.03% to 0.7%, with Brazil's real slipping from three-month highs hit last session, as the dollar climbed 0.5%. "It (jobs data) reduces the scope for a 50bp cut this month, though does little to alter the easing narrative linked to the Fed," strategists at TD Securities wrote in a note. Brazil's real fell 0.4% after a strong rally on Thursday spurred by the government's pension reform bill clearing a key congressional hurdle, which paved the way for it to be put to a lower house plenary vote before the parliament breaks for recess.
The dollar index, which measures the greenback against a basket of six major currencies, was up 0.5% after data showed that U.S. job growth rebounded strongly in June as government hiring surged. "The results were really encouraging and reinforced the underlying strength of the U.S. market and the U.S. economy in general, and is likely to help to temper the markets' aggressive calls for easier policy from the Federal Reserve," said Candice Bangsund, asset allocation manager at Fiera Capital in Montreal. The Brazilian real fell 0.7% after touching its strongest level in more than three months on Thursday after the government's pension reform bill cleared a key congressional hurdle.
Markets are hoping that International Monetary Fund head Lagarde will maintain the ECB's recent dovish tone, which was echoed by the U.S. Federal Reserve, and had spurred inflows into riskier assets last month. "People think that Lagarde will be more dovish," said Gustavo Rangel, chief economist, LATAM at ING, adding that general expectations of a more support from the ECB and Fed are driving the market on the day.
(Bloomberg) -- A Brazilian Senate committee is expected to recommend that 12 current and former executives of Vale SA, including Chief Financial Officer Luciano Siani and ex-Chief Executive Officer Fabio Schvartsman, face criminal indictments for a fatal dam disaster in January.The rapporteur of the committee proposed the indictments Tuesday after a 2-1/2-month congressional inquiry into the causes of the dam break that left at least 246 people dead and unleashed a sea of mud over the city of Brumadinho, where Vale had an inactive iron ore mine. His report says the company was negligent and its risk and compliance controls were flawed.If approved, as expected, the report will be sent to several Brazilian authorities, including federal and state police and prosecutors, as well as the governor of Minas Gerais and the ministries of energy and environment. The report, which will be voted on by the committee on July 9, has political weight and sends a message from lawmakers to their electorate, but it will be up to the authorities to decide on legal action."Vale respectfully disagrees with the recommendation for indictment,” it said in a statement Tuesday. "The company considers it necessary that a scientific and technical conclusion be reached on the cause of the disaster before criminal culpability is determined. Vale and its employees will continue to cooperate with authorities to determine the cause of the dam breach."The panel also recommended a special participation tax of as much as 40% on highly profitable miners. Shares of the world’s largest iron ore producer tumbled 4.2% to 51.39 reais, the worst performer on the 66-member Ibovespa index in Sao Paulo.Risk ToleranceVale’s attempt to reduce costs resulted in heightened tolerance for risks, according to the report, which recommends criminal indictments for homicide, bodily injury and environmental damage. It also suggests that authorities continue investigating Vale and its executives.The report also recommends indictments for two people from TUV SUD, which Vale hired to inspect the dam.Federal prosecutors of Minas Gerais are already investigating Vale in cases that are running under secrecy. They haven’t criminally charged anyone yet. In Brazil, prosecutors and police can both recommend criminal action to a judge."As expected, the first version of the investigation report about the Brumadinho accident would have a punitive in nature," said Bradesco BBI’s analyst Thiago Lofiego, in a report from July 2. "While we do believe that mining sector legislation is likely to change in Brazil, we do not think the highly punitive proposals in question will materialize," Bradesco analysts said, referring to the tax.The levy would be "very negative" for Vale, said Leonardo Rufino, a partner and portfolio manager at Pacifico Gestao de Recursos, which oversees about 2 billion reais ($520 million) in assets, including Vale shares.\--With assistance from Luiza Ferraz.To contact the reporters on this story: Maria Luiza Rabello in Brasilia Newsroom at firstname.lastname@example.org;Sabrina Valle in Rio de Janeiro at email@example.com;Vinícius Andrade in São Paulo at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, ;Luzi Ann Javier at firstname.lastname@example.org, Walter BrandimarteFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Most Latin American currencies rose on Wednesday as optimism over U.S.-China trade talks offset weakness after the U.S. Federal Reserve dampened hopes of aggressive interest rate cuts. U.S. Treasury Secretary Steven Mnuchin said on Wednesday that the United States and China were close to a trade deal, CNBC reported ahead of meeting this week between presidents Donald Trump and Xi Jinping at the G20 Summit. The news turned around weakness in Latin American assets after comments from Fed policymakers on Tuesday pushed investors to trim expectations of a half-point cut in interest rates in a policy meeting next month.
The Brazilian real edged lower for a second day, while the Mexican peso hovered near two-week lows even as the greenback touch new lows against a basket of major currencies. Minutes from the Brazilian central bank's June policy meeting showed the economy is stagnating and uncertainty surrounding economic and fiscal reforms is clouding the growth and inflation outlook. "BCB minutes emphasize that pension reform is the prerequisite for any easing," Citi analyst Dirk Willer wrote in a note.
(Bloomberg) -- Brazil was the standout in JPMorgan’s re-rating of Latin American equity markets as the firm raised its year-end price target for the Ibovespa index while lowering forecasts for the rest of the region.Strategist Emy Shayo increased the 2019 target for the Brazilian benchmark to 108,000 from 105,900, implying about a 6% increase from current levels. The more optimistic projection is based on expectations that approval of social security reform will lead to more growth and lower risk. It comes as Brazil’s weaker-than-expected economic recovery has been leading to downward revisions to earnings estimates.“Our analysts are shrugging off Brazil growth concerns and focusing on policyimprovement driving a better investment environment,” Shayo, who has an overweight rating on the nation’s equities, said in a June 24 research note. “We are confident that the approval of the social security reform should quickly ignite growth in 2H.”Meanwhile, the target prices for Chile’s IPSA, Mexico’s Mexbol, Colombia’s ColCap and Peruvian stocks were cut by 9.8%, 7%, 5.6% and 3.7%, respectively.JPMorgan has an overweight rating for Colombian shares due to “good growth” and cheap valuation. The bank has a neutral stance for Chile and is underweight for Mexico and Peru. Argentine stocks were inaugurated at underweight after their recent outperformance and uncertainty around the upcoming presidential election.\--With assistance from Eduardo Thomson.To contact the reporter on this story: Vinícius Andrade in São Paulo at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Richard RichtmyerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Brazil’s equity benchmark Ibovespa index closed above the 100,000 mark for the first time on record as dovish signals from the Federal Reserve added support to global asset prices, and potentially signaling increased odds for rate cuts in Brazil.The index rose 0.9% to 100,303 on Wednesday, pushing gains this year to 14%.“I’m constructive on Brazil,” said AllianceBernstein’s portfolio manager for the Emerging Markets Multi-Asset portfolio Morgan Harting. “Within emerging markets, there’s a good combination of rapid earnings growth, reasonable valuations, room for interest rates to decline meaningfully and some scope for market-friendly reform,” said Harting.Investors have been seeing increased odds for the approval of President Jair Bolsonaro administration’s flagship social security overhaul as fewer lawmakers seem inclined to vote against it. The optimism regarding the bill -- which is seen as as a key issue in tackling the country’s budget deficit -- has been somewhat countering disappointment with the nation’s slower-than-expected economic recovery.According to the hedge fund firm Bahia Asset Management, Brazilian stocks are the most attractive asset in the local market and the Ibovespa may gain another 20% by year end to about 120,000. The fund expects growth to pick up from the second half of the year onward and the reform’s advance to unlock other microeconomic measures.“The most important driver is productivity,” said Will Pruett, a Boston-based money manager at Fidelity. “So I’m looking for micro reforms that address productivity, such as the tax reform and the privatization agenda,” Pruett said.The perspective of lower rates for a longer period has also been supportive. Economists expect Brazil’s central bank to cut its benchmark interest rate -- which is at a record low of 6.50% -- to 5.75% by the end of the year, according to BCB’s weekly survey.To contact the reporter on this story: Vinícius Andrade in São Paulo at email@example.comTo contact the editors responsible for this story: Brad Olesen at firstname.lastname@example.org, Catherine LarkinFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Updates prices) By Susan Mathew June 19 (Reuters) - Latin American currencies firmed on Wednesday, with Brazil's real and Mexico's peso reversing session losses to trade higher after the Federal Reserve signaled possible rate cuts of as much as half a percentage point in 2019. Brazil's real was up 0.2%, reversing losses of up to 0.6% logged earlier in the day, while Mexico's peso rose 0.1%, recovering from a decline of as much as 0.4%. Other regional currencies added to their gains. Most Latam stocks followed suit, with Sao Paulo-traded shares erasing losses to trade 0.8% higher, while gains in Mexican and Colombian stocks were bolstered.
The real rose about 0.4% while Sao Paulo-listed stocks also gained 0.4% to touch a near three-month high after Brazil's congressional pension reform bill coordinator Samuel Moreira said the proposed changes would generate savings of 913.4 billion reais ($237 billion) over the next decade. "All indications suggest that pension reform remains on track and may leave the committee with greater savings than the consensus expected," Dirk Willer, head of emerging market strategy at Citi Research, and Kenneth Lam, an emerging markets FX strategist, wrote in a note. The Argentine peso advanced for a third day in a sign of approval from markets after President Mauricio Macri picked a moderate running mate that could broaden his voter base in elections to be held later this year.
While most Latin American stocks weakened on Monday, Brazil shares rose sharply after a pro-government march mounted pressure on Congress to pass reforms seen as crucial to the economy. Sao Paulo's Bovespa ...
It’s been more than a month since U.S. equities lagged behind their global peers on consecutive days. Perhaps it’s just a reflection of investors deciding it’s a good time to cull some gains with U.S. stocks among the best performers this year, especially on a currency-adjusted basis. The escalating trade war between the U.S. and China has taken a turn for the worse, and nobody is really sure how much damage it will do to profits.
Brazil's real weakened sharply on Thursday, falling below 4.04 per dollar for the first time in more than seven months as worries intensified over the slow progress of government reforms in Congress and ...
Brazilian retail sales in March posted their biggest annual decline in over two years, government statistics agency IBGE said on Thursday, adding to concerns the economy struggled badly, and possibly contracted, in the first quarter. Coming a day after the central bank kept its benchmark Selic rate on hold at 6.50 percent, the figures give further weight to the view that the economy will stagnate this year and add to calls for a cut sooner rather than later, economists say. Brazilian markets fell, with the real sliding more than 1 percent closer toward 4.00 per dollar and the Bovespa stock index falling 1.3 percent to 94,383 points.
An index of Latin American stocks rose on Wednesday, propped up by robust Brazilian shares gaining on optimism around a pension reform proposal, while most Latin American currencies firmed against a listless ...
Brazil's currency and stocks fell on Wednesday as potential hurdles for pension reforms weighed, while other Latin American stocks tracked world equities lower. Currencies succumbed to a stronger dollar. ...