2025 started unavailable to aggressive investors, especially for those with exposure in Latin America. Donald Trump’s arrival to the presidency shook global financial markets, generating a complex panorama for the equity. Portfolio managers seek to capture specific opportunities in some specific actions, although they recognize that it will not be a year of great profits. However, Brazil appears as a light at the end of the tunnel. What is the reason?
In the last hours, JP Morgan reduced the qualification of Mexican actions due to the slowdown in economic growth and the impact of tariffs imposed by the United States. In contrast, adopted a bullish position on Brazilian actions, highlighting two key factors: the possible end of the rate of interest rates and the impulse represented by the new economic stimulus measures in China for Brazil’s exports. This occurs despite persistent doubts before the fiscal policy carried out by Lula da Silva and the slowdown in economic growth, which is estimated around 2.3% for 2025.
Brazil could be an opportunity for the long term: the two factors at stake
The Central Bank of Brazil makes a third consecutive rise of 100 basic points at the SERIC ratetaking it to 14.25%, its highest level in more than eight years. However, JP Morgan anticipates that after the March meeting there could be a pause in the monetary adjustment, which renews optimism among investors.
Besides, There are other factors at play: one related to the global context and another to the 2026 elections.
In the international sphere, The commercial war between Trump and China could benefit Brazil, The largest world soy, cotton, meat and chicken exporter. JP Morgan points out that, in a scenario of higher tariffs by the US, Chinese companies would increase their purchases in Brazil, favoring the economy of the South American country.
For investors seeking to increase their exposure to Brazil, The focus is not in the short term, but on the electoral horizon.
“Valuations of the Brazilian Variable Income Market have been punished throughout 2024. The ETF of Brazilian shares (EWZ) fell from US $ 32.6 au $ 22.4 at the end of the year. In 2025, we saw a recovery above US $ 26, although international tensions generated a contraction again, placing the EWZ around au $ s24.5. We believe that much of the deterioration is due to fiscal policies that were not well received by the market, since they expanded imbalances in public accounts and pressed to the Brazilian real, “he explained Juan Manuel Franco, SBS group chief economist, in dialogue with scope.
Despite this, Franco considers that the Brazilian market is still attractive, Thanks to its sector diversification and value still far from its maximums. “The key catalyst could be an electoral event that brings with it a new government focused on correcting macroeconomic imbalances and with a more favorable position to the market, “said Franco. In addition, the Brazilian market is distinguished by the payment of dividends, which reduces the opportunity cost of entering before reaching precise minimums.
Among the investment opportunities, Franco highlighted papers such as Petrobras (PBR), Cloud (NU) and Vale (Vale). Likewise, the punished Valuation of Banco Do Brazil (BBG) is attractive to investors seeking exposure to the Brazilian financial sector.
Besides, Jorge Ángel Harker, Adcap International Market Analyst, stressed that while the actions are somewhat beaten in recent times, they are cheap. In this sense, he remarked that Clenk is a good long -term action. “Petrobras, with its dividend policy, its managment and everything you are doing is interesting. Free market that although it is an Argentine company, is affected by what happens in Brazil because it is its largest market, it is a good long -term opportunity. The last is that if the global economy avoids recession and China implements measures to reactivate, it will also be well positioned by 2025, “Harker added.
Brazil: an investment that does not lack risks
According to JP Morgan, The increase in market uncertainty could generate a risk aversion scenario that would affect Brazil. The first point they point out is that in the case of a recession in the US (fear that this Monday materialized on Wall Street), the Variable Rent markets both in Brazil and LATAM would be affected.
“For Brazilgreater uncertainty about Fiscal policy and the possible adoption of unorthodox measures to stop inflation They could prolong the monetary adjustment cycle instead of shortening it. In addition, an eventual deceleration in Chinacombined with the end of rebound in variable income markets, It would have a negative impact on Brazilian actions “American bank analysts expressed in the brief.
This adds to another report they had published at the end of February where they highlighted that emerging market shares (Em) registered four consecutive years of low performance in front of developed markets (DM), accumulating a disadvantage of 45% since 2020. Although so far this year they have shown a slight recoverythe entity warns that this trend could not hold Due to the growing commercial uncertainty.
Historically, emerging markets tended perform better when the Federal Reserve cuts interest rates. However, JP Morgan points out that the uncertainty around US commercial tariffs Impose one Higher risk premium about the assets of these markets. As a history, in 2016after Donald Trump’s electoral victory, emerging actions They fell 10%.
Despite the challenging context for the equity, Brazilian actions represent an attractive opportunity both for those looking for reduce your Argentine risk exposure as for those interested in diversify your portfolio with assets with long -term Suba potential.
Source: Ambito
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