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All Eyes on Brazil

Let’s face it: Brazil is having a moment.

We know we’re not the only office that spent half the summer with our TV sets tuned to the World Cup. And the phenomenon is likely to repeat itself in two short years, when the Olympics hit town. Despite their lopsided loss to Germany in the semifinals, Brazil has had a good summer, and that’s without even taking Carnival into account. The perennial soccer powerhouse is attracting quite the crowd these days.

More eyes than ever were focused on the host country of Brazil during the global soccer tournament, but this isn’t the first time Ipreo has paid attention to our South American neighbors.

“In the near- to mid-term, my outlook is very cautious. The stocks that do not have government intervention are very expensive and the ones that do are very cheap. The retail sector has very stretched valuations. There has also been a flow of resources into these companies that are justified based on what is actually happening with the true performance.” – Buy-side Analyst

Back in April 2013, the Ipreo Perception Analytics team called upon 21 investors and analysts familiar with the region to help clear up some of the shifting sentiment towards Brazil’s growth prospects and discovered that the recent pullback in the economic performance of this so-called “emerging market” has the investment community exercising caution.

Citing declining GDP growth, rising inflation, unclear governmental policies and regulations and more, the respondents to our inquiries indicated a negative near-term outlook – and only slightly more positive mid-term expectations – for the Brazilian equity market. But Ipreo’s sources, who are well-acquainted with the region via their broad experience covering Latin American companies, do see some potential for change in the future. To close out their review, they’ve provided a list of potential catalysts that would help re-ignite interest in the South American nation.

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