Juan Egana
Latin America Strategist
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Brazil: Overhyped
Overstretched foreign inflows into Brazilian markets will reverse, while soaring oil prices will not benefit Brazil in the near term. Avoid the country’s risk assets and the BRL, and stay underweight Brazilian equities and fixed income relative to EM. We also recommend paying 10-year Brazilian swap rates.
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Banxico Eases
Mexico’s central bank eased, even as global central banks are turning cautious, supporting our EM strategists’ view that Mexico will outperform EM peers. Banxico cut by 25 bps Thursday, consistent with our Emerging Markets strategists’ view that investors…
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The Case For LATAM Banks
Go long LATAM ex. Brazil banks / short global bank stocks. Brazilian bank equities will underperform due to poor and worsening macro fundamentals.
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Diverging Inflation Paths Favor Mexico Over Brazil
Despite similar headline inflation, underlying dynamics favor Mexico over Brazil across EM assets. Brazil’s latest CPI print was in line with consensus at 4.44%, near the upper end of the target range. In Mexico, inflation surprised modestly to the downside…
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A Hawkish BCB Mounts Risks To Brazilian Markets
Brazilian risk assets will underperform global peers on the back of ultra hawkish monetary policy. The Brazilian Central Bank (BCB) opted to hold interest rates at 15% due to still elevated inflationary pressures. The decision will reinforce a continued…
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LatAm Inflation Update
Although inflation has fallen within the upper end of the target range in both of LatAm’s largest economies, our EM strategists are more constructive on monetary easing and financial markets in Mexico than in Brazil. Mexico’s latest CPI prints surprised to…
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Maduro’s Ousting: Implications For Oil And Latin America
There will be little market and macro implications from the US intervention in Venezuela. Fade away any near-term moves in global oil markets. However, Colombian and Peruvian assets will benefit from lower political risk premiums. We are upgrading Colombian equities and fixed income to overweight versus EM.
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Chile’s Right-Wing Reset Points To Structural Outperformance
Stay overweight Chilean risk assets and long local-currency government bonds as elections deliver a pro-business shift that supports a structural re-rating. This weekend’s elections marked a decisive return to pro-business politics, setting the stage for a…
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Chile’s Right-Wing Reset = Structural Outperformance
Following this weekend's election, we reiterate an overweight stance across Chilean risk assets relative to EM benchmarks and advise buying local currency government bonds (currency unhedged).
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Brazil: On Thin Ice
Brazil’s financial markets are on shaky ground following the central bank’s hawkish meeting and disappointing political developments, reinforcing our negative view on the country’s risk assets. The three pillars of this year’s rally in Brazilian risk assets…