From Forbes, Oct. 29:
As everyone now knows, Jair Bolsonaro has pulled Brazil to the right. Wall Street has gone overweight since.
After weeks of mostly foreign headlines about Bolsonaro's racism,
misogynism, fascism, and other 'isms, the electorate in Brazil shrugged
it off and gave him about 10.7 million more votes than his challenger
Fernando Haddad from the beleaguered Workers' Party (PT). In percentage
terms, it was the PT's worst showing since 1986.
The market reacted positively on Monday morning but has since
corrected as investors cash in after a meteoric rise in Brazilian
securities. Over the last month, while the S&P 500 and the MSCI
Emerging Markets Index are in negative territory, the MSCI Brazil is up
16.8%. Petrobras shares are up 30%.
Mutual fund firm Neuberger Berman is overweight Brazil, mainly focusing on the currency and the local bond market.
"The real remains undervalued even after its recent rally," say
Neuberger Berman analysts led by Conrad Saldanha. "Brazil lacks any
Argentina-style external funding pressures." They also think interest
rates are coming down thanks to low inflation at around 3% and two-year
bond yields still high at 8.5%. Bond yields fell on Monday, in fact....MORE
