A new all-time low in interest rates combined with economic reforms which are supported by the large corporations in Brazil has been attracting investors to the Brazilian markets for the past couple of months. But with equity markets overheating, up 60% since March the real questions is, if there is any game still left in Brazil’s equities?
Large corporations are looking to expand their services into the LATAM market, choosing Brazil as their way in. JP Morgan, recently announced the purchase of a minority stake in Brazil’s growing fin-tech FitBank. FitBank facilitates the transactions of over 90,000 accounts for bill payments, offers standard banking services and financial management.
Another sign that the Brazilian market is on the rise is the line-up of IPO’s. Brazil is set to have the largest amount of IPO’s since 2007, with 4 huge public offerings happening in the next few weeks. The drugstore chain Pague Menos is set to raise 1.2 billion Reais, as forthcoming IPO’s captivate high demand from both domestic and international investors.
For an EM investor right now, Brazil is looking like a good opportunity to diversify your portfolio. Considering the rapid post-pandemic recovery of the equity market and increase in direct foreign investment, forthcoming fiscal policy amendments and a plunge in poverty – investing in Brazil is starting to look promising again. However, the budget deficit of 11.5%, Bolsonaro- inflicted political instability and a volatile currency are on the plate too.