Ask The Experts: Not Too Late to Be Invested In Brazil
Rafael Bardella, Head of Latin America Investment Specialists at BNP Paribas Investment Partners, speaks to Fundsupermart about his outlook for the Brazilian equity market.
What is the outlook for the Brazilian equity market over the next two to three years?
- Positive outlook for the next two to three years
- Growth in domestic demand will be main driver
- Brazil's currency, the real, is also expected to stabilise at close to its current exchange rates
- Brazil's exchange comprises of a number of commodity companies
- Global outlook will be positive on commodities
The Brazilian government seems to have some trouble balancing its inflation and economic growth. What are you views on this matter, and what is the impact for investors?
- Inflation always a concern when it comes to Brazil
- Brazil has met inflation targets since 2005
- Since the financial crisis, focus has been on growth rather than inflation
Despite these economic headwinds, what are the reasons for investors to invest in Brazil?
- Brazil is the sixth largest world economy with average GDP per capita at USD 13,000
- Growing middle class with growing income levels supportive of domestic consumption
- Brazil does not have net external debt; reserves are higher than public debt and public debt is declining
- Meeting primary fiscal surplus targets
- Long-term trend of declining interest rates supportive of equity market
The Brazilian equity market has rallied approximately 20% in SGD terms since the start of the year (as of 20 March 2012). Do you think this is sustainable and is it too late for investors to start investing in Brazil if they have not already done so?
- Current valuations for the Brazilian equity market is close to its five-year historical average
- Good mid to long term prospects
- Not too late for investors who do not have exposure to Brazil
||25 April 2012
||Ask The Experts: Not Too Late to Be Invested In Brazil