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I have published my views on Brazil more than once over the past year (most recently in my November 2021 blog post), but the environment there has changed markedly through the first few months of this year, with COVID-related risks seemingly on the wane and the Russia/Ukraine conflict having driven up commodity prices — so I thought now would be an opportune time to share a fresh perspective on South America’s most populous country.
To wit, some of my colleagues and I just returned from a productive business trip to the bustling metropolis of Sao Paulo, where we visited retail, financial, health care, and education companies. Based on our conversations with firm executives and others, we found the corporates’ mood to be quite positive overall. And why not? Business trends have been on the upswing, mask mandates were recently lifted, soybean prices are sky-high as of this writing, and (for better or worse) the city’s notoriously brutal traffic is back again.
My main takeaway from this trip and my team’s latest research: At the country level, I think Brazil is a “buy” right now and perhaps through the rest of 2022 as well (though time will tell.) At the company level, as always, there are of course both risks and opportunities for investors to be mindful of.
At present, my bullish outlook for Brazil is predicated on several key factors, including:
1Positive carry is an investment strategy that involves investing borrowed money and then earning a profit on the difference between the return and the interest owed. Investors commonly use positive carry in currency markets.
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Brett Hinds
Jameson Dunn