Find out which are the best and worst sectors of the Stock Exchange to position yourself in the 2nd semester

After a difficult semester for the Ibovespa, which lost 5.99% in the period, pointing out perspectives for the Brazilian stock market is not an easy task. So much so that some managers chose not to participate in this report, as they think that the coming months will be very complicated, preferring not to risk predictions. The analysts who spoke, in turn, were unanimous in saying that the Brazilian stock exchange starts the second half of 2022 cheap, with bargains in practically all the listed sectors. The problem is that inflation remains challenging, interest rates remain high and, to top it all off, there are elections in October.

The second half of the year also begins with fears of a global recession hanging over the markets, in the face of a more austere stance by Central Banks raising rates to contain record levels of inflation, whether in the United States or Europe. There is still a war going on in Ukraine, strongly impacting the prices of commodities and the risk of new lockdowns in China, which remains attached to its Covid zero policy, although it has recently relaxed restrictions.

Given this scenario, how to identify the most promising sectors of the Brazilian Stock Exchange for the second semester? Will companies linked to the domestic economy, so penalized in the last year, find room for recovery? And what are the sectors that investors should avoid in the period? See below what analysts and managers consulted by the InfoMoney.

Will commodities continue to rise?

Experts are divided when drawing prospects for commodities of the Exchange. Despite being considered a good sector to protect against escalating inflation, some analysts believe that companies may have already priced in the scenario of high raw materials and would be more sensitive to a reversal in prices. “Weaker price can heavily impact equities, so I wouldn’t be too long in commodities“, says Matheus Tarzia, equity manager at Neo Investimentos.

Leonardo Rufino, partner and manager of Mantaro Capital, believes that the prospects for commodities remain positive, especially oil. The manager has relevant positions in companies such as Petrobras (PETR3;PETR4) and PetroRio (PRIO3). “Oil supply has become problematic because of the war in Ukraine and the movement to reduce carbon emissions. Demand has picked up since last year, due to the economic reopening. It is difficult to predict the movement of commoditiesbut oil has less chance of having a very strong fall”, says Rufino.

Werner Roger, founding partner of Trígono Capital, also believes that oil will continue with strong prices and heated demand in the coming months. “Restrictions with Russia continue, there is no additional supply and there are few exporters”, he explains. He also highlights that there are positive perspectives in the pulp sector. “Especially on account of China, which has been demanding more and, apparently, a lockdown, with government incentives. Europe also has a supply problem, as Russia is a wood exporter, so prices are staying at attractive levels – and they should stay that way,” says Roger.

Rafael Cota Maciel, Inter’s variable income manager, believes that the shares of commodities on the Brazilian stock market they start the semester very discounted and would feel less of a drop in the price of raw materials. “The concern here is whether we will have a global recession and a fundamental turnaround, to a very sudden drop”, he says. “But if prices continue at the current level, we will have good prospects”, he adds.

XP has reduced its exposure to commodities in their recommended portfolios, reflecting concerns about a possible global economic recession and the short-term risks of a slowdown, with central banks raising rates. “We wanted to reduce this risk a little in our portfolios, but in the medium term we continue to believe that the supply of raw materials remains tight. This should keep the prices of commodities at very high levels,” says Jennie Li, stock strategist at XP.

Is it time for “domestic” actions?

For stocks linked to the domestic economy, which have been penalized on the stock exchange due to high interest rates and inflation, especially retailers (which were the biggest drops in the Ibovespa in the first half), experts are a little more optimistic, even who see a difficult scenario. They expect that, in the coming months, the cycle of monetary tightening in Brazil will come to an end and believe that the rise in prices should also slow down, reflecting an already very high Selic.

“At some point, after interest rates rise so much, inflation should give a sign of cooling off. And when that happens, it can be a relief for companies in the domestic sector”, says Rufino, from Mantaro Capital.

“Domestic sectors are beginning to have greater upside potential. The market will gradually feel more comfortable holding positions in the segment, as it is able to have a better view of the medium and long term”, says Isabel Lemos, stock manager at Fator.

Tarzia, from Neo Investimentos, says that political uncertainties should also leave the scenario with the elections in October. “As we have definitions, the chances of better pricing the assets are greater. I think the market exaggerated in the correction of these papers and I believe in an upward correction of assets related to the domestic economy”, she says.

XP, on the other hand, remains pessimistic about domestic sectors and has significantly reduced its exposure to retail and consumer-oriented companies in its portfolios. “The macroeconomic scenario continues to be very challenging, with inflation still high and with no signs of slowing down, straining people’s purchasing power. We still see a difficult scenario in the second semester”, says Jennie Li.

Sectors to position in the second half

The electricity sector appears as one of the favorites of analysts consulted by the InfoMoney. “It is a defensive sector, it has lower risk, low volatility, good dividends and long contracts. The outlook is positive, especially after going through climatic problems of lack of rain”, says Roger, from Trígono Capital.

Rufino, from Mantaro Capital, says that the sector is cheap and says that the manager is positioned in Eneva (ENEV3) and Eletrobras (ELET3;ELET6). “Eletrobras was privatized, but it still has a state-owned price. I imagine that the company will appreciate significantly in the coming months, with the entry of a new team and a lot of cost cutting”, he says.

The manager also highlights the shopping center segment, especially the high-income ones, such as Iguatemi (IGTI11) and Multiplan (MULT3). “These are companies that are delivering the best results in their history and have recovered from the pandemic in a strong and surprising way. The fear that people had in the past about competition from e-commerce ended up not going in that direction. The shares are cheap, close to the lows in several years and I believe that this is a detachment that will be corrected in the coming months”, says Rufino.

In addition to energy, Trígono also bets on sectors linked to agribusiness and highlights Kepler Weber (KEPL3), linked to the silos and warehouses sector. “The production of sugar and alcohol also pleases us, with countries increasing the percentage of ethanol in fuels. One reason is cost reduction and another is CO2 emissions”, says Werner Roger.

He notes that the vehicle and agricultural machinery sector has also been showing high growth, even with difficulties in the production chain. And he also cites the logistics and road sector as a segment to be positioned in the second half of the year. “We have a great vocation in road transport and a good part of the production passes through this segment”, he says.

Sectors to escape in the second half

Experts recommend caution with companies in the segments that are more sensitive to inflation and high interest rates. This includes retail and consumption, although the second half may open space for a recovery of these companies. “It is a segment that already has a very strong dispute, with several competitors that make the margins become more and more compressed. And with a lower purchasing power, the impact is quite big”, says Roger.

For the manager, the financial sector should also suffer more in the second half of the year. With high interest rates and compressed working capital of companies, the tendency is for an increase in delinquency. “It is a challenging scenario, with the economy not helping, and with great competition between companies in the sector”, says Roger.

Matheus Tarzia, from Neo Investimentos, says that it is not worth being exposed to companies in the real estate and construction sector. The drop in income and high inflation make it difficult to maintain the heating of the sector and the cost of finishing has also risen a lot.

Regardless of industries, XP is fleeing companies that do not generate profit and have valuation very high. “We like companies with valuation reasonable, which should continue to grow, protected from domestic macroeconomic issues. We should see an economic slowdown in the second half after an even better than expected first,” concludes Jennie Li.

Looking for a good buying opportunity? XP Strategist Reveals 6 Cheap Stocks to Buy Today.

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.

Check Also

Beatriz Machnick’s story

At 16, Beatriz Machnick was already in her second job. Upon arriving at the large …