💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

POLL-Brazil's Bovespa seen up at 76,500 points by end-2011

Published 03/24/2011, 10:16 AM
Updated 03/24/2011, 10:20 AM

* Brazil stocks seen up 13 percent by 2011 year-end

* Outlook abroad to stoke volatility through year

By Luciana Lopez

SAO PAULO, March 24 (Reuters) - Brazilian stocks will gain another 13 percent by year-end, buoyed by continued growth in Latin America's biggest economy, even as a clouded outlook abroad could derail gains, a Reuters poll found on Thursday.

A strong local economy, marked by low unemployment and rising salaries, will fuel equities. An accelerating global recovery and continued commodities consumption by China will likely help too.

But a series of shocks abroad this year has already highlighted Brazil's vulnerabilities and will continue to test investors' appetite for riskier assets.

With violence in the Middle East and North Africa, an earthquake and a tsunami in Japan and the ongoing euro zone debt crisis, investors could stay jumpy for months.

Sao Paulo stock exchange's benchmark Bovespa index will reach 76,500 points by the end of the year, 12.8 percent higher than its Wednesday close of 67,795.51, according to the median forecast of 24 analysts, strategists and fund managers surveyed by Reuters over the past week.

Forecasts ranged from 59,000 to 89,000. In December a Reuters poll forecast a close of 80,000 points this year.

The Bovespa index should rise to 68,000 by mid-2011, the current poll found, lower than the December 73,000 forecast.

The advance forecast now would fall between gains of the past two years. The Bovespa surged 83 percent in 2009 on Brazil's quick exit from recession, but then sputtered a mere 1 percent higher last year as global markets began to catch up.

But the outlook this year remains particularly cloudy.

"This will be a year of volatility, difficult to predict how the year will close," said Julio Hegedus, chief economist for InterBolsa in Sao Paulo. "There are a lot of variables out there."

Markets have grappled this month with the aftermath of a massive earthquake and tsunami in Japan, including fears that the world's third-biggest economy will import fewer goods as it rebuilds, eventually dragging on global growth. And damage to reactors there sparked fears of a nuclear catastrophe.

Revolts through the Middle East and North Africa have also rattled investors, pushing petroleum prices to 2-1/2-year highs on fears of disrupted supplies.

Oil prices have eased somewhat since then, but airstrikes by western nations against Libya have kept tensions high.

BRAZIL ECONOMY GROWING

In contrast, Brazil's own economy will likely continue to outpace much of the developed world this year.

Analysts in a central bank survey this week said they see Brazil's economy growing about 4 percent this year. While that is slower than the 7.5 percent jump of 2010, such expansion would still put Brazil among the world's most briskly-growing major economies.

The country's central bank has also signaled that it's likelier to rely on such tools as raising bank reserve requirements than hiking interest rates to hold back inflation, which could help keep credit available to flow into equities, analysts said.

And not everything abroad is grey, with China poised to continue the robust growth that's made it a driver of global growth -- especially for Brazil, which now counts the Asian giant as its biggest trade partner.

"We're living in a time of great development in Brazil, but since our country is a big exporter of raw materials and we depend on international prices, any movement, especially in China, can affect things either for good or ill," said Jose Costa Goncalves of Maxima Corretora.

That could leave some stocks especially poised to climb.

Preferred shares of state-controlled energy company Petrobras slumped 23 percent last year, largely on questions around a massive capitalization plan and government interference, noted Kathryn Rooney Vera, emerging markets strategist at Bulltick Capital Markets.

This year, with that sale done, the stock could recover. Higher oil prices could help the stock, as well.

Still, with such uncertainty abroad, Brazilian markets will largely depend on what happens elsewhere this year.

"All we need for upside is a calmer international outlook." said Fabio Cardoso, a partner at Adinvest in Rio de Janeiro. "We believe that with a more subdued outlook the Bovespa index can hit new highs."

(Additional polling by Bangalore Polling Unit; Editing by Jon Loades-Carter)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.