With Lula or Bolsonaro, the direction of the Stock Exchange is upwards in 2023, say managers


Regardless of who wins the elections this year, equity fund managers are betting on a positive performance for the Brazilian stock exchange in 2023.

With the majority of investors expecting that the deceleration of inflation will allow the BC (Central Bank) to promote some reduction in the basic interest rate (Selic) during the coming year, market agents predict that Brazilian stocks, which are at levels considered by them to be excessively discounted, will have room to take at least part of the delay.

The main difference between the scenarios with Lula or Bolsonaro in the presidency from 2023 onwards lies in which companies should be primarily responsible for the expected positive performance for the Stock Exchange.

According to the managers’ assessment, a re-election of President Jair Bolsonaro (PL) tends to be more favorable for state-owned companies with shares listed on B3, especially Petrobras and BB (Banco do Brasil), with the prospect of continuing a biased economic policy. more liberal, possibly with the advance of new privatizations.

In the case of a victory for ex-president Luiz Inácio Lula da Silva (PT), the education sector and construction companies, especially those more focused on low income, driven by possible social programs to be adopted by a PT government, have greater chances of standing out in relation to their peers.

“We see potential for the stock exchange in 2023 in both scenarios, with Lula or with Bolsonaro”, says Bruno Di Giacomo, investment director at Nero Capital.

Even with the recovery in recent weeks —the Ibovespa rose about 11.5% from the end of the first half to September 8, having returned to 109,000 points—, the manager says that the stock exchange remains cheap and has room to seek 130 thousand points next year.

Especially if the fall in interest rates is confirmed, and especially those with a longer term, which are the ones that matter most to assess the fair price of a share, he adds.

XP analysts are even more optimistic, and expect the Ibovespa to reach 130,000 points this year.

In early September, the broker’s specialists revised the forecast for the stock index in December 2022 from 120,000 to 130,000 points. The estimate includes an appreciation potential of 18.2% in relation to the closing on September 8.

“The main reason behind the revision was the drop in real and nominal long-term interest rates, which fell between 1.0 and 1.5 percentage points in the month of August”, point out XP analysts in a report.

Manager of shares at Fator Administração de Recursos, Isabel Lemos also says that, whoever wins the elections, companies in the retail sector, which were among the most affected by the rise in the Selic, should benefit from the beginning of the monetary easing process. to be conducted by the BC from 2023.

In the Focus bulletin, economists project the interest rate at 11.25% at the end of next year, compared to the current 13.75%. “These are stocks that were penalized too much by the market and that are relatively attractive”, says the manager.

She also says that she is starting to look a little more closely at the real estate sector, which has also lagged behind due to rising interest rates.

Isabel says she sees good opportunities in the segment, whether among construction companies with a focus on the high-income public, less affected by economic cycles, or among those who work more focused on the middle and low-income groups, and who can gain additional breath if programs housing projects have a higher priority in an eventual PT government.

For the manager of Versa Fundos de Investimento, Luiz Fernando Alves, the education sector emerges as a potential positive highlight on the Stock Exchange in the event of a third term of former President Lula.

“The heyday of education companies on the stock exchange was at the time when the PT governments gave a great incentive to Fies (Student Financing Fund). main differences in terms of performance on the stock exchange between a left-wing government and a right-wing government”, says Alves.

Fiscal risk remains a key focus in 2023

Despite the positive visions for actions in the coming year, managers point out that the fiscal policy and the measures to be adopted to bring the debt to a sustainable trajectory remain undefined and, because of this, will continue to be among the main points of concern on the radar of the Marketplace.

Tomás Awad, founding partner of the manager 3R Investimentos, says that he sees a continuity of the current government as a scenario with a little more predictability for the evolution of economic policy in 2023, with Paulo Guedes remaining in the Ministry of Economy, continuing the more liberal agenda from the economic point of view.

In a victory for the PT candidate, adds Awad, the government’s strong name in the economy is still unknown, and it will be essential for it to be possible to have greater clarity on what the main guidelines will be in the area.

“Depending on who the minister is in the event of a PT victory, he may even have a honeymoon with the market in the first few months, not least because foreigners have a positive memory of the Lula government, but the scenario ahead is more uncertain” , says the manager of 3R.

Awad says he’s been keeping the funds’ portfolios relatively balanced. There are positions that may do better in a reelection scenario, such as Petrobras shares, which tend to stand out with the prospect of privatization. But also with bets considered more defensive, which should do well in a scenario of ex-President Lula’s return, such as supermarkets and drug manufacturers.

“We see a scenario of Lula’s return as more worrying, in which we have to opt for a more cautious portfolio”, says the specialist.

Founding partner and manager of GTI Administração de Recursos, André Gordon says that he currently holds one of the main positions in the funds’ portfolios at Petrobras.

He says that, despite the recent strong rise in shares, and the political risk intrinsic to the asset, the state-owned company remains at attractive price levels, given the high level of oil in the international market, and the consequent robust cash generation expected for the company. in the coming quarters.

He states, however, that the possibility of a victory for PT candidate Fernando Haddad for the government of São Paulo led him to recently eliminate the position he had been holding at Sabesp. “If Haddad wins, there is room for Sabesp to suffer a lot on the stock market”, says Gordon.

While a victory for candidate Tarcísio de Freitas, supported by Bolsonaro, could result in a privatization of the sanitation company, if the next governor is the former mayor of the capital, this possibility is almost nil, says the GTI manager.

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