Economic uncertainty limits Ibovespa in January, while global market soars

January 2023 came to an end and was marked as one of the best beginnings of the year for variable income investments. The world’s main exchanges and cryptocurrencies accumulated strong appreciation, while the dollar lost strength in the world, showing great appetite for investor risk.

Even with the risk of recession on the radar, investors took a ride with the reopening of China and the prospect that interest rates will not remain at high levels for long.

“Reopening exports growth to the rest of the world and increases the possibility of a soft landig (light landing) of the American economy”, says the Chief Economist of Galapagos Capital, Tatiana Pinheiro.

Among January’s biggest gains, Bitcoin is up more than 40%, the best for the month in 10 years. The Nasdaq, the stock exchange for technology companies, rose more than 10%, the best January in 22 years. In Asia, Hang Seng also skyrocketed by more than 10%.

Ibovespa and dollar

Despite the 3.37% appreciation of the Ibovespa in January, the performance of the Brazilian stock exchange was below that of the main international exchanges. The strong flow of foreign buyers even tried to boost the index, but the pessimism of local investors did not allow it.

According to data from B3, the balance is positive at R$ 10.899 billion until the 27th of the month. “Foreigners are more optimistic, willing to take risks. Domestic investors are on the back foot. The government is starting and has uncertainties”, says the chief economist at Galapagos.

But if foreigners were not able to raise a lot of prices on the Stock Exchange, on the exchange market it was the opposite. The flow was so strong in the month that the real performed better than the DXY index, which measures the strength of the dollar against a basket of currencies from developed countries.

For Tatiana, foreigners are more excited about Brazil, as the country is one of the main beneficiaries of China and is in better conditions than other emerging countries. “The reopening slides a lot in Brazil, because it is positive for commodities and we are one of the main exporters”, she explains.