A sharp deterioration in the fundamentals of the Brazilian economy paved the way for the Brazilian stock market to end the year in the light of the lantern among the main global indicators. NOT. Ibovespa (IBOV), the main indicator of b 3 (B3Sa3), it is down 12% so far, while there is an increase in other emerging markets, such as trade in China (2%) and India (29%).
With soaring domestic interest rates, a direct effect of high inflation, investors who over the past year have increased their bets on variable income in search of more returns, change direction and return to what is already known (and more secure) fixed income. . The reading is also that this scenario is expected to intensify with the arrival of a fierce and polarized presidential election, which is expected to bring a lot of volatility to the markets.
Investors’ moods have mostly turned in the last three months, after the expected recovery in the domestic economy failed to materialize. This was reflected in the ongoing revisions to GDP forecasts by financial institutions. Last week, news of a technical recession after negative third-quarter GDP confirmed the reasons for the pessimism.
“In June, when the stock market peaked at 130,000 points, there were expectations of strong economic growth, transient inflation that would not force interest rates to rise significantly, as well as an expectation of progress on reforms. Since then, it has deteriorated on all fronts, ”he said. Chief strategist at XP, Fernando Ferreira.
The executive says mistrust of the federal government’s budget commitment worsens the scenario, exacerbated by the easing of the public spending ceiling.
Ibovespa’s performance is a sign of lower GDP growth expected compared to other emerging markets next year. According to data from the International Monetary Fund (IMF), Brazil is expected to grow 1.5% in 2022, compared to 2.5% in South Africa and 2.5% in Chile, for example. However, the fund’s forecasts are much more optimistic than those of other financial institutions. In the Central Bank’s Focus bulletin, the forecast for GDP growth in 2022 has already reached 0.58%.
about to leave
The flight of investors from the stock market is already evident in numbers. Data from the Brazilian Association of Financial Entities and Capital Markets (Anbima) shows that equity funds recorded recoveries of more than R $ 8 billion in October and November, reflecting the positive streak underway since February. On the other hand, fixed income funds recorded inflows of over R $ 50 billion during the same period.
As a result, since early June, when Ibovespa recorded its highest score in its history, the market capitalization of all B3 companies has fallen by R $ 1.33 trillion, according to data from Economática.
Trafalgar partner Igor Lima noted that business performance remains positive, with good implications for third quarter results due to higher demand following the end of the period of social isolation. “But 2022 will be a more complex year, financial and macro risks have increased so much, calling into question the fundamentals of companies”, specifies Lima.
At Wealth High Governance (WHG), which invests globally, Brazil’s share of the portfolio, which reached 10% of the total in April, has declined and is now below 5%. Conversely, China, which has also not performed very well this year due to Chinese government interventions in the economy, is growing, explains Daniel Goyer, co-director of WHG.
Investors are looking for above-market growth in emerging markets. If you slow down, says Gewehr, you lose that trait. According to him, by putting on the table only the actions that the director considers of good quality, there are more interesting prospects than those currently offered in Brazil. Newspaper information State of São Paulo.