Brazil occupies 0.5% of the world’s investment portfolio, says analyst

The Brazilian stock exchange broke a record for resources invested by foreigners in 2022, when non-residents contributed BRL 100.8 billion in shares on the secondary market. This was the highest value recorded since 2016, the year in which B3 started to disclose the data.

Even with the positive result, Brazil represents 0.5% of the world’s investment portfolio and between 6% and 7% in emerging market portfolios, according to Constância Investimentos analyst Gustavo Akamine.

He points out that one of the main indexes considered by foreign investors, in the case of countries like Brazil, is the MSCI Emerging Markets.

Akamine recalls that, in the early 1990s, the country represented around 25% of this index, while today it is around 5%. “Consultants look at these flows and the balances that investors have in emerging countries and notice that we represent only 0.5% of global portfolios”.

Brazil, however, has an important attraction for the foreign market: the price of Brazilian companies’ assets.

“A very simple way to measure how expensive or cheap stocks are is to make a relationship between price and earnings. Today, this yield for Brazil is around 16% and 17%. In the United States, this figure drops to around 5%. In these metrics, Brazil is among the cheapest countries to invest in”, assesses Akamine.

In 2023, until the 6th of this month, the foreign investment balance is positive: BRL 13.78 billion, according to B3. With the lockdown in China, war in Ukraine and high inflation around the world, other countries have entered the radar of investors.

“Brazil is seen as a potential major exporter to China at the time of reopening, being a more neutral country, not affecting trade relations so much. This turned out to be interesting for foreign investors. As well as the interest rate itself, since we have one of the highest real interest rates in the world”.