MARKETS: Although Brazil is still preferred, regional investors are more optimistic with Argentina

Fund managers: What else does the last Latam FMS say?

• The elections are a hot topic in Brazilbut only a few are prepared for it. 57% of respondents say that investors will only add positions from the first quarter of 2026. 64% claim that it plans to increase their allocation to variable income in the next 6 months (compared to 40% last month and maximum since January 2024).
• Meanwhile, Cash levels rose to 7.8% in June (compared to 6.1% in May and the maximum since October 2023) and 55% protected themselves to a market drop in the next 3 months (compared to 25% last month and maximum since December 2022).
• Investors total beta and discretionary consumption: sector positioning shows that Investors continue to mainly overcome public services and the financial sector, but the assignment to discretionary consumption was the one that increased the most this month. Energy and materials are still the most under-popular sectors. Beta high and high quality strategies are now preferred by participants. Last month, high quality strategies and high dividends were preferred.
• Investors are more constructive in Brazil, Chile and Argentina: investors claim that Brazil could overcome Mexico in terms of performance and that Chile could overcome Mexico in the Andean region. In Argentina, investors continue to expect a greater improvement in assets prices.
• As for what are the expectations for the dollar in 2025, Most participants expect a weaker dollar. But there is no consensus in relation to whether the stimulus in China will be sufficient to boost the prices of upward raw materials in the next six months.
• When talking about the interest rate in Brazil necessary for investors to buy shares again, the majority of participants answered that the rotation towards the variable income will occur when the SELLIC rate is 10% per year (today it is 14.75%). In this sense, 45% say there will be no more increases, 48% still expect increases, but There is no consensus on Selic at the end of 2025. On the Brazilian GDP in 2025, most expects the real growth of Brazil to be between 2% and 3%.
• In the Mexican case, there is no waste of optimism Since, considering the possibility of American tariffs to Mexico, only 3% have a positive vision of the prices of Mexican assets in the future. Uncertainty remains high. In addition, most participants have many doubts about GDP growth this year. Regarding the Banxico interest rate (today at 8.50% to one day) there is no consensus on its level at the end of the flexibility cycle or as soon as it will end in 2025.
• On the Andean countries, 39% of the participants consider oil prices are the main risk of tail for this group. When betting on a winning market in the coming months, Chile is the preferred option in this group.
• The portfolio allocation shows that cash levels increased to 7.8% in June Faced with the historical average of 5.3%. In addition, the net envelope position positions decreased to -12 % compared to +19 % last month.
• In relation to the percentage of investors with a risk higher than normal in the portfolio, they replied that it is above the historical average. They argue that The assumed net risk was -15% in June compared to -9% last month.
• The percentage of investors who protected themselves to an abrupt fall of the stock markets in the next three months were 5%, well above the historical average. In another order, between 5 and 7% of the investors surveyed qualify the liquidity conditions and the long interest rates (10 years) of the treasuries as good or very good, similar to the last month.