The Brazilian Stock Exchange (Bovespa) had a turbulent month of August, with the Ibovespa index dropping by approximately 5%. However, some market players remain optimistic about the index’s performance by year-end.
Brazilian Stock Exchange Turbulence
There are several key drivers of optimism for the Ibovespa. First, the Brazilian economy is expected to grow in 2023, albeit at a slower pace than in previous years. This growth should support corporate earnings and, in turn, the stock market.
Also Read: Brazilian Capital Market: Americanas and Light Crises
The Brazilian central bank has begun to cut interest rates, which is also seen as positive for equities. Lower interest rates make it cheaper for businesses to borrow money and invest, which can lead to higher profits.
Third, political risk in Brazil has declined in recent months. This is due in part to the recent elections, which saw the victory of a more moderate president.
Analysts at JPMorgan are bullish on the Ibovespa, forecasting that it will reach 135,000 points by the end of the year. They believe that the combination of economic growth, lower interest rates, and reduced political risk will support the market.
Analysts at XP Investimentos are also optimistic about the Ibovespa, with a target price of 133,000 points. They believe that the monetary easing cycle will be a major driver of the market’s performance in the coming months.
Source: InfoMoney