브라질 주식시장, 2012년 전망

[프란치스코]

Brazil’s equity benchmark is poised to post slight gains in 2012, boosted by more interest-rate cuts and still-healthy growth in China, Brazil’s largest trading partner, analysts said.

An advance next year on the Ibovespa equity index is “not going to be anywhere near the spectacular 20% and 30% that you saw some years back,” said Enrique Alvarez, who heads Latin America fixed-income research at IDEAglobal in New York. “There are going to be moderate gains and a lot of sector discrimination,” with domestic plays benefiting the most during the first part of next year, he said.

The roll-out of more rate cuts by Banco Central do Brasil, slower but still robust economic growth in China, and significant improvement in, if not outright resolution of, the euro-zone debt crisis are factors that could help Brazil’s equity market rebound after an ugly slide in 2011.

The Ibovespa index has partially recovered after falling as much as 30% for the year in early August. Still, it’s on track to fall 17%, which would be its worst decline since a 41% plunge three years ago.

The push-and-pull of encouraging and downbeat developments in Europe’s long-running financial crisis hurt Brazil’s market in 2011, and domestic concerns such as surging inflation and a jump in the value of Brazil’s currency also played their part in sending investors fleeing.

As the central bank makes further cuts in the key rate and as inflation concerns somewhat soften, “we do believe there will be a significant amount of upside to the equity market,” in 2012, said Joel Wells, co-manager of the Alpine Emerging Markets Real Estate Fund.

HSBC recently outlined its case for Latin American equities, saying they were “extremely attractively valued” on a P/E ratio of 9 times 2012 forward earnings, compared with a five-year average of 11.4 times.

Even if a prolonged downturn should materialize, it said, regional economies have many tools at their disposal to counter it, noting Brazil has “room” to cut interest rates from the current 11% level.

Exiting equities

Worries about Brazil’s economic growth underpinned one fund manager’s decision earlier this year to exit equities and focus on fixed-income assets.

“We started exiting [equities in] Brazil a couple of months ago,” reducing exposure to the market in part ahead of a foreseeable depreciation in the country’s currency after a big run-up, said Heiner Skaliks, portfolio manager of the Strategic Latin America Fund.

He said the fund expected economic growth next year in Colombia, Mexico and Peru to outpace Brazil and make those countries more attractive.

The Brazilian central bank cut its outlook for 2011 GDP to 3% from 3.5% following weak third-quarter GDP figures. The bank foresees 2012 growth at 3.5%, a less aggressive view than the one held by Brazilian President Dilma Rousseff for growth of 4.5% to 5%. Economists widely expect expansion in China, where Brazil ships large amounts of commodities, to slow to about 9% this year, down from over 10% in 2010.

Inflation watch

Brazil’s inflation rate stood at 6.56% heading into 2012, higher than the central bank’s ceiling at 6.5%. Most of the “leaps and bounds” this year stemmed from higher food and fuel costs, said Alvarez at IDEAglobal.

Policy makers project improvement in the inflation rate to 4.7% by the end 2012. That outlook is brighter than the consensus estimate among private economists for the rate to ebb to 5.4%.

Wells expects inflation to “remain sticky,” but not to aggressively increase next year, as pressures have been aided by a credit-market deceleration and lower nominal growth. The benchmark interest rate could be below 10% by April, “and that would certainly provide some stimulus for growth,” said Wells.

Disinflationary forces from slower growth will be tempered by a weaker Brazilian currency, minimum wage increases, looser credit, and government spending on new development programs, Win Thin, global head of emerging markets strategy at Brown Brothers Harriman, told clients. “Still, we have no doubts” that policy makers will continue cutting the rate most likely by 50 basis points “until reaching 9.5%, perhaps even lower.”

Alvarez foresees more “tsunami waves coming from overseas,” resulting in the bank cutting its benchmark rate to as low as 9%. “That plays positively into the spectrum of financing for corporations, so that should be a moderate positive in boosting economic activity,” next year.

Investors should still keep watch, however, on the impact of commodity prices on food and fuel costs, which will determine if there will be deeper deteriorations in inflation expectations, said Alvarez.

BNP Paribas, meanwhile, cautioned that “absent a global shock, the central bank will have to start hiking rates by 2013 — if it really cares about inflation.”

Stocks to watch

Wells expects investors “will slowly but surely,” turn away from defensive stocks and move into domestic cyclicals, in the first half of the year. Homebuilders, which are able to take advantage of a lower-rate environment, are likely to perform well during the second half, he said.

Stocks in that sector were hammered in 2011, but the moves haven’t necessarily reflected the underlying performance of the companies, Wells said. “Sales have been relatively strong, their balance sheets are in decent shape and there is strong demand.”

Along with projections for strong per-share earnings growth, home builders “present a pretty attractive investment, particularly at these valuation levels.”

Investors should look at developers for lower-income buyers as they will benefit from a declining tax on low-income housing, he said. He named MRV Engenharia e Participacoes SA and PDG Realty SA as likely beneficiaries.

On a local currency basis, MRV shares traded in Sao Paulo are facing a more than 30% drop in 2011, and PDG Realty shares are looking at a slide of more than 40%.

Skaliks said the fund he manages still has equity positions in the oil and gas sector, in part because of its exploration opportunities, and holds a “oversold” security in the steel sector.

As for the overall performance in the equity market in 2012: “I wouldn’t be surprised if we ended the year flat,” he said. “There will be a lot of volatility in the market next year,” and depending upon when investors make assessments, if they do so “right after news from Europe or China surfaces, then that could be a distorting snapshot of what the reality is in Brazil.”

(인용: Carla Mozee, 마켓워치)