Landers and Mobius are bullish
In the previous article, we explored the bullish views of Will Landers and Mark Mobius on Brazilian stocks. It’s important to note that Will Landers was cautious about Brazilian stocks in 2015.
In an interview with The Telegraph in 2015, Landers warned investors that 2015 was going to be a very tough year for Brazil. He also mentioned that his exposure to Brazilian equities had fallen to 55% compared to 70% a year earlier. However, toward the end of April 2016, Landers told International Adviser that political change would be good for Brazil in 2017.
A more cautious approach
There are fund managers out there who want to approach Brazil more cautiously at this time. JPMorgan Chase is one of them.
Earlier in 2016, Julio Callegari, the head of the Brazil Fixed Income team at JPMorgan Asset Management, wrote in an article that “fiscal fundamentals are much more challenging in Brazil and a political compromise (not a geopolitical agreement) is the crucial component to trigger a rally in Brazilian assets. Until we approach this compromise, there is no rush to buy Brazilian assets.”
This point was made well before the votes in congress and the senate for the beginning of Dilma Rousseff’s impeachment proceedings.
Aggression or caution?
If you’re a young retail investor with money to invest for the long term—by which we mean over five years and beyond—then you may want to invest in Brazil right now.
For some, taking the passive investment route would be helpful, as a passive fund that either invests completely in Brazil (EWZ) or broadly in Latin America (ILF) (EEML) could be a good entry point and could work as an anchor for Latin American investment.
Once the macroeconomic and political picture in Brazil becomes clearer, actively managed mutual funds (PRLAX) (SLANX) may become an option as well.
Other retail investors may wish to wait a bit longer before investing in Brazilian stocks (ABEV). Once the interim president announces policies, there will be a better view of what lays ahead for Brazil in the medium term. If you’re investing for the medium term, Mexico could be a good bet, whether you invest in stocks (AMX) (FMX) or funds (EWW) (ELAAX).
In the next article, let’s take a look at how financial markets in Brazil could behave going forward.
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