SAO PAULO (Reuters) – XP raised the Ibovespa target price for the end of 2022 from 123,000 points to 130,000 points, predicting that the positive external flow will remain strong in the coming months.
In this scenario, the main index of the Brazilian stock exchange would approach its record closing of 130,776.27 points, reached on June 7 of last year. This Friday, the Ibovespa rose 1%, to 121,200.38 points, at 15:09.
Despite the Ibovespa having risen 14.5% from January to March, marking the best quarter since the last quarter of 2020, XP sees Brazilian stocks still at attractive levels, with the price/earnings ratio projected at 7.5 times, compared to the average of the last 15 years of 11.2 times, according to a report signed by Fernando Ferreira, Jennie Li and Rebecca Nossig, dated Thursday.
On the other hand, although the profits projected by the market show clear signs of improvement and recovery, the rise in real interest rates remains a negative factor.
“To see an upside potential in the Ibovespa fair value, we would need: consensus earnings estimates rising further, and/or multiples expansion, which could come from a continuation of strong external capital flows as well as local real interest rates lower”, according to analysts.
XP highlighted that, despite the discrepancy between the surge in commodity and banking sectors in 2022 and the more timid advance of sectors linked to the economy and domestic consumption, “we still think it is too early to make a full migration to domestic players”, in the face of a challenging macroeconomic scenario.
The report also addressed the so-called inversion of the yield curve in the United States, when the yield on short-term papers are higher than the longer ones, which is seen in the market as a possible sign of recession ahead, as has already happened in other times in the past.
For analysts, a recession caused by higher rates from the Federal Reserve, the US central bank, which started the upward cycle in March, “would not necessarily be negative” for Brazil, given that in other moments of monetary tightening in the US Brazilian stocks outperformed global markets. They also cited that commodity prices are likely to remain high.
The Ibovespa’s rise in 2022, after falling 11.9% in 2021, is benefited by factors including the inflow of foreign capital, share values seen as discounted and high commodity prices, according to analysts.
(By Andre Romani)
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