Betting on the stock market on the rise in Brazil and on the fall in the US can be a winning strategy, say managers

Betting on the rise of the Brazilian stock market in the coming months, especially in a scenario of continuity of the liberal economic policy adopted in recent years, and in the fall of the United States stock market, in an environment of continued high interest rates and probable recession, emerges as a potentially winning strategy, in the assessment of investment fund managers in the Brazilian market.

Experts expect US interest rates to move closer to 5% throughout 2023, and because of that, even with the recent correction, US stocks have not reached levels that can be considered cheap. or attractive.

In the case of Brazil, the likely start of interest rate cuts by the BC (Central Bank) at some point next year, and the efficiency gains to the economy brought about by the set of reforms approved in recent years, may take the stock exchange to levels between 130 thousand and 150 thousand points over the next few months.

“Brazil is doing relatively well. We are less ugly than the others,” said Felipe Guerra, founding partner and investment director of manager Legacy Capital, during participation in a Bloomberg event this Thursday (6th) in São Paulo.

He added that the Brazilian Central Bank made the interest rate adjustment process before the global peers, obtaining as a consequence a control of inflation also in front of the rest of the world. “If there is a continuity of economic policy, inflation will certainly go down.”

Founding partner and co-director of investments at Vinland Capital, André Laport stated that, considering the price history, the Brazilian stock exchange “is cheap” at current levels. It could become an attractive destination for foreigners looking for returns as uncertainty about the country’s economic policy in 2023 eases after the first round, he said.

Laport also said that, in the short and medium term, he does not rule out the Ibovespa index trading around 130 thousand points. The manager, who expects a sharp landing in the US economy next year, considers the possibility of betting on the rise of the Bovespa (long) and the fall of the S&P 500 (short).

Guerra, from Legacy, indicated an even greater optimism, and said that the stock market at 150,000 points next year is not completely off the radar, as long as the government elected at the end of this month prioritizes an agenda of reforms and of fiscal adjustment.

In this sense, he stated that he sees with much more optimism for the country’s macroeconomic framework a re-election of President Jair Bolsonaro (PL), compared to a victory for former President Luiz Inácio Lula da Silva (PT).

In Guerra’s opinion, in a re-election scenario, BC president Roberto Campos Neto will have greater confidence to start cutting interest rates earlier, and in a more intense magnitude, making room for a strong positive performance of the local stock exchange.

For Paula Moreira, director of fixed income, currencies and commodities at Goldman Sachs, regardless of who wins the elections, the government is expected to adopt a more populist bias, especially in the second half of the term.

Therefore, the supporter, added the expert, is that the elected government will take advantage of the first year to address important structural reforms for the economic development of Brazil. She cited tax and administrative reform among those that should be among the priorities in the government’s plans from 2023 onwards.

“We see, at least in the short term, an outperformance (performance above the market average) of Brazilian assets, regardless of who wins,” said the director of the American bank, who cited a long position in reais and a short position in other currencies. Latin America as a strategy that can bring positive returns to investors’ pockets.