Strategists at Morgan Stanley have cut Brazilian stocks to “neutral” in their Latin America portfolio, citing rising fiscal risks in 2023, according to a report sent to clients on Sunday.
“The sequence of recent events reduces the chances of an orthodox finance minister nomination, fiscal easing should lead to higher interest rates for longer maturities, and higher real bond yields should undermine the apparently attractive valuation thesis. for actions,” they see.
Last week, statements by President-elect Luiz Inácio Lula da Silva (PT) and the content of the Transition PEC, which aims to exclude disbursements with the Bolsa Família from the spending ceiling rule and makes other budgetary changes, generated apprehension in the market about the evolution of the country’s public debt.
At the same time, speculation has grown that PT Fernando Haddad, former mayor of São Paulo, is the main name considered by Lula to command the Treasury in the next government.
“If a loose fiscal scenario occurs, the coming years should be good for Brazilian fixed income assets, but not for equities”, stated Guilherme Paiva and team.
Even so, they calculate the Ibovespa at 125,000 points at the end of 2023 – an appreciation of almost 15% compared to the close of last Friday. However, far from the historical maximum of 131,190.30 points, considering intraday data, reached in June last year.
At the same time, strategists raised the recommendation of Mexican shares to “overweight” in light of Morgan Stanley’s scenario of a mild slowdown in the US economy, as well as a possible change in the outlook for the electricity and energy sectors.
In Latin America, Morgan Stanley also has an “overweight” recommendation for Peru, “neutral” for Colombia and “underweight” for Chile.
The ten preferred shares of strategists in the region are Mercado Livre, Itaú Unibanco, Porto Seguro, Assaí, Weg, Vale, Americanas, Prologis Property, OMA and Credicorp.
Source: CNN Brasil
A journalist with over 7 years of experience in the news industry, currently working at World Stock Market as an author for the Entertainment section and also contributing to the Economics or finance section on a part-time basis. Has a passion for Entertainment and fashion topics, and has put in a lot of research and effort to provide accurate information to readers.
