The main Brazilian financial market index, Ibovespa, rose for the 15th session in a row, completing a sequence of 12 record renewals.
“This movement is the result of a combination of factors: improvement in the external scenario, expectation of interest rate cuts in the main economies and flow [de capital] entering Brazil”, says Gustavo Trotta, partner at Valor Investimentos.
In addition to macroeconomic factors, João Daronco, CNPI analyst at Suno Research, highlights that the results of Brazilian companies have surprised positively, proving resilient even in a scenario of .
On November 3rd, a level that few – like XP – believed would be possible to reach this year. On Tuesday (11), .
“We carried out a ‘bottom up’ analysis, believing in the companies’ results and their discount on the screen price. Furthermore, the global rotation (weak dollar) would help our projections due to the closing of the nominal interest curve”, explains Raphael Figueredo, equity strategist at XP Inc.
And for the analysts heard by the CNN Brazil It shouldn’t stop there. They claim that the fundamentals are positive to continue projecting new highs.
Daronco notes that assets on the Brazilian stock exchange are still cheaper than the potential they can actually reach.
“We are still below the historical average when we look at some indicators of valuationsuch as price/earnings and dividend yield. To converge to the historical average, there would still be ~15% room for appreciation”, he points out.
Looking at the trajectory of interest rates in Brazil and the world, whose future trend is downward, Trotta indicates that “the scenario still favors this continuity in the medium/long term”.
This is because, with rates falling in the country, variable income tends to gain attractiveness, potentially taking what is allocated in fixed income to shares. However, interest rates in Brazil would still remain high enough to make it interesting for foreign investors to make contributions here with money obtained at lower interest rates abroad.
XP’s expectation is that the Ibovespa will reach 170 thousand points at the end of next year. Raphael Figueredo makes an emphatic defense that “variable income has to be in the investor’s portfolio”, stating that it “ceases to be an option and becomes a strategic necessity in the face of changing economic regimes”.
Hênio Scheidt, product manager at B3, assesses that “the variable income market has changed radically in recent years”. Since 2020, the number of investors in variable income has doubled from 3 million Brazilians.
“Reaching the level of 150,000 points signals that the Brazilian stock market is experiencing a period of appreciation. Ibovespa is one of the assets that appreciated most in the year and investors continue with their diversification and sophistication strategies, of which variable income is an important part”, he ponders.
Of the challenges ahead, analysts highlight the pace of interest cuts in Brazil – which if slower than expected could have an impact -, the international scenario – especially with regard to tariffs and geopolitics -, whether corporate results will maintain resilience and, in particular, the electoral scenario.
“Everything will depend on more micro-structural issues in Brazil, such as what the fiscal direction will be and the progress of the electoral environment. The big challenges seem to me to be related to looser fiscal policies, which could impact interest rates and keep them high for longer, which would harm companies’ cash generation”, points out Daronco.
Looking at the uncertainty aspect, Verde Asset Management, owned by Luis Stuhlberger, opted for a safer path: “in the midst of this scenario, considering the more limited prospective return for the risks and volatility that we see ahead”, wrote the fund in a letter to investors.
