Ibovespa falls and stands out among emerging market exchanges

Understand why the fall of the Brazilian stock market can represent an optimistic future according to experts.

Estimated reading time: 4 minutes

In recent weeks, the Ibovespa has dropped again and has even closed below the level of 100 thousand points. This is due to the negative moment for investors, both in external and internal aspects. However, experts say that the Brazilian stock exchange can be a good investment option.

On the international scene, the rise in interest rates to try to contain inflation, especially in the United States, is one of the factors that contributes to a global economic recession. Given this, investors withdraw their assets in order to avoid losses and act with greater caution.

In Brazil, after the announcement by the federal government to try to stop the increase in fuel costs that threaten the spending ceiling, added to the electoral moment, there was a great exit in the area of ​​investments.

For specialists, however, the national market presents some conditions that improve its positioning to receive investments and the fall of the stock market can be an important factor in this sense.

Advantages of the Brazilian stock exchange

According to economists, the main advantage of the Brazilian stock exchange is the stocks related to commodities, which represent 30% of the market’s reference index, the Ibovespa. Such products, mainly iron ore and oil, were boosted by the War in Ukraine and the pandemic, which favored producing and exporting companies.

In addition, Brazil is almost at the end of the cycle of high interest rates and the real is devalued against the dollar, which represents a strong protection against crises.

The growing interest rate added to strong inflation causes a decrease in the companies’ margin, but even so, the results indicate that they are, at this moment, worth less than their real value on the stock market, which indicates a possibility of appreciation.

Another factor to be considered is the migration of investments in countries that present greater risks, such as China and Russia, due to the lockdown and the war, to Brazil. This is because the dividends of Brazilian companies are higher than the historical averages even with the high Selic.

Ibovespa down

Although it presents some positive aspects, as experts say, the Brazilian stock market is far from the value considered ideal, above 120 thousand points, and, still, with the constant drops, it reached its worst level since November 2020.

Analysts say that this movement is common to the markets of emerging countries and occurs due to the increase in interest rates in nations around the world. The United States, for example, reached the highest mark in 28 years. Countries like England, Australia and Canada start the bull cycle in July.

Added to this, the repercussions of the War in Ukraine and the lockdowns to contain the Covid-19 pandemic in China impact the world economy and bring down markets.

According to experts, the Brazilian market was already pessimistic even before US interest rates. Now, the stock market is extremely cheap for pricing a crisis without having gone through it.

Even under this negative scenario, analysts point out that the Brazilian stock market should present one of the best results among emerging countries this year.

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Image: EDSON DE SOUZA NASCIMENTO / Shutterstock.com

About Yadunandan Singh

Born in 1992, Yadunandan approaches the world of video games thanks to two sacred monsters like Diablo and above all Sonic, strictly in the Sega Saturn version. Ranging between consoles and PCs, he is particularly fond of platform titles and RPGs, not disdaining all other genres and moving in the constant search for the perfect balance between narration and interactivity.

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