Mark Mobius Sees Brazil Stocks Climbing to All-Time High by Year End
(Bloomberg) -- The three-month rebound in Brazilian stocks has further to run, at least if two veteran emerging-market investors are right.
Mark Mobius and former BlackRock Inc. director Will Landers are among those calling for further gains in Latin America’s biggest equity market, betting low interest rates set the stage for a quick economic rebound. For Mobius, the Ibovespa index should reach its January all-time high by the end of the year, an accomplishment that Landers also sees as possible.
“I am positive on Brazil,” said Mobius, who set up investment firm Mobius Capital Partners in 2018 after three decades at Franklin Templeton Investments. “The companies in which we have invested have been recovering quickly,” he said, citing retail, internet and technology firms.
The Ibovespa index has bounced back about 57% from its March lows, but is still down 14% this year after the pandemic derailed the government’s reform agenda and stoked fiscal concern. Still, Mobius says local companies have benefited from a government that has eschewed the nationwide lockdowns pursued elsewhere in the world. Many states including Sao Paulo, Brazil’s richest, are gradually dismantling the limited restrictions that were imposed.
Landers, now the head of Latin America equity strategy at Banco BTG Pactual SA’s asset-management unit, is turning overweight Brazilian stocks saying stronger-than-expected activity data, including retail sales, offer a silver lining for the economy. While he doesn’t have a target for the Ibovespa, he doesn’t rule out another record this year.
“Why not?,” he said, adding he likes e-commerce firms, as well as banks. “We can resume the more positive bets for Brazil.”
While bullish, both veterans agree keeping a close eye at the evolution of the pandemic is crucial for those long in the nation’s stocks. A global hotspot for the virus, Brazil trails only the U.S. with over 67,000 confirmed deaths and 1.7 million total cases. On Tuesday, President Jair Bolsonaro tested positive.
Mobius says the top risk for local assets is a stricter lockdown that could disrupt production, and Landers says his firm is monitoring the U.S. numbers as a gauge for what is in store for Brazil.
The Ibovespa is trading near a four-month high and briefly topped the 100,000 mark on Thursday morning, before giving back gains.
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