Brazil Divides Investors in the U.S.

06/25/2018 - 12h28

It seems like two different Brazils. On one side, there is a country to be regarded cautiously after the truck drivers' strike and the electoral uncertainties emerging on the horizon. On the other, there is an economy with "cheap" assets and the positive perspective of profits for companies.

The different perspectives are given by economists and managers analyzing the same data to decide what to do with their clients' investments in Brazil.

It is healthy to have different opinions, says Axel Christensen, an investment strategist of BlackRock asset managers. Those who see the glass half full look at controlled inflation and the perspective of economic growth in the long term.

Tina Byles Williams, the president of FIS Group, believes that Brazil's stock market, the country's exchange rate against the dollar and other Brazilian assets have already taken quite a beating. She believes their prices are below fair.

The positive side appears mainly when Brazil is compared to other developing countries, such as Mexico, which will hold elections in July and is one of the most affected countries by the change in the U.S. commercial policy. Patrick Jamin, who is responsible for the investment strategies of North Coast Asset Management, says that investors already anticipate the risks that a non-reformist candidate might be elected - the market's greatest fear. "There is a positive perspective for companies' profits."

There are pessimistic forecasts as well. Bank of America Merrill Lynch has reduced by 50% its projection for Brazil's G.D.P. growth in 2018, from 3% to 1.5%.

Gabriela Santos, a global market strategist of JP Morgan Asset Management, believes the truckers' strike had an impact on the economic activity which cannot be recovered.

Translated by THOMAS MUELLO

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