The second half of the year starts with the Ibovespa above our YE09 forecast. This is mainly the result of foreign investors, who sought to gain a return on their capital in a world where a zero interest rate predominates. This means chosing stocks with very high daily volumes traded where there is a guarantee for investors of an exit as fast as their entrance. This being so, we start 3Q09 without changing our expectations for the year-end. We have therefore chosen a portfolio that is much more conservative than the ones we chose in previous months. We are also monitoring upcoming IPOs that, with Visanet’s successful allocation, should start cropping up, but at a more selective rate.
The Brazilian Central Bank meets again on July 22. Expectations are that this will be the last meeting this year in which it cuts interest rates. The Government remains more optimistic on the growth of the country for the rest of this year than does the market. To be sure, it did revise its estimates downwards in line with the World Bank but, unlike the World Bank and the majority of economists, it still forecasts a growth (0.8%), while others estimate a fall of around 1.0%. Data on the second quarter should point to a recovery, especially for personal consumption, but not enough to reverse the year’s negatives.
The appetite of foreign investors decreases
Foreigners have been the clear buyers in the Brazilian stock market during 1H09. Looking for some form of profit when interest rates in most countries are around zero, they invested their money in Brazil, enabling the Brazilian stock market to recover a good part of the losses it suffered at the start of the crisis. The question asked now is who will continue to maintain the good performance of the Brazilian stock market. Bets return to pension funds, but these have slowly increased the participation of stock in their portfolio from 10% three years ago to nearly 20% this year.
Profit taking should predominate. Download: Brazil – Monthly allocation – July 2009 Banif- IXE
Stock – Catalyst/Fundamentals
AMBV4 – Solid market share leadership, with an attractive FCF yield
BRTP4 – Greatest potential in the sector to increase in value
CSNA3 – Increase in ore sales to China
DURA4– Synergy gains from the merger with Satipel
ELPL6 – Should announce good dividends when publishing 2Q09 results
GOLL4 – July is a good month for air traffic
ITUB4 – Continuous growth in credit leads to better 2Q09 results
MMXM3 – Should announce new business deals in July
PCAR4 – Defensive business, with exposure to consumption and a high FCF yield
PETR4 – Should perform on a level with Ibovespa
VALE5 – Increase in the price of nickel caused by an increase in demand.
Source: Source:IXE & Banif, 01.07.2009
Filed under: BM&FBOVESPA, Brazil, Exchanges, Latin America, News, Banif, BM&FBOVESPA, Brazil, Capital Markets, Emerging Markets, Exchanges, IXE, Latin America, Market Analysis, Vale do Rio Doce
[...] Read the rest of this great post here [...]