Brazil’s stock market rout has turned the country into a destination for global bargain hunters.
Investors from abroad poured 12.4-billion reais into Brazilian stocks in October, the most since June, excluding any potential inflows from equity offerings, according to exchange data compiled by Bloomberg. The shift continued into November, with foreign buyers adding 1.7-billion reais to equities on Monday as the market rallied off its lows.
That has made Brazil look like a haven from lofty valuations. The Ibovespa index is trading at about eight times 2022 earnings, according to data compiled by Bloomberg. That’s about half the valuation of the Euro Stoxx 50 Index, a Eurozone benchmark, and roughly one-third of the S&P 500’s. Yet the outlook for Brazil is clouded by the increase in interest rates and next year’s presidential elections. In the face of those uncertainties, local investors have been shunning risk, accelerating the outflows from local investment funds and exerting a drag on the market.
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