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(Bloomberg) – One of the main drivers of the recovery of Brazilian stock markets this year is expected to continue full-blown in 2019: corporate earnings growth.
The Ibovespa index has grown more than 15% since the beginning of the year, which is one of the best performances among the world's leading benchmarks, corporate earnings are hitting low rates and controlled inflation. In the third quarter, according to Banco Santander Brasil, earnings before interest, taxes, depreciation and amortization of companies listed in Ibovespa increased by 27%.
"Companies have already adjusted their cost structure and there is also a cycle of financial deleveraging" Santander's strategist, Daniel Gewehr, said in an interview. The bank expects Brazil's earnings per share to rise 20 percent in 2019, double the emerging market average, according to Gewehr.
Santander Brazil preferred industrial and consumer stocks, which benefit from ongoing economic recovery, as well as the role of some state-owned companies.
Bank of America Merrill Lynch is also optimistic. David Beker, a stock market strategist for Latin American banks, said earnings growth would be "robust." According to BofAML, the Brazilian economy is growing by 3.5% in 2019, above consensus, and earnings per share by 22%. Beker has one of the most optimistic forecasts for the Ibovespa, with an index of 120,000 by the end of next year.
Investors are also interested in the confidence figures. Data published by the Getúlio Vargas Foundation showed that consumer confidence reached the highest level in four years in November. For Frederico Sampaio, director of investments at Franklin Templeton in Brazil, the figures may indicate an increased likelihood of a significant upward revision of economic activity forecasts.
"The first sign that appears is trust," said Sampaio. 19659004] Become a partner of the largest companies in the stock market with ZERO RATE of brokerage! Click here and open a Clear account!
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