Morgan Stanley recommends betting on Brazilian, Peruvian and Chilean stocks | Economy | The steps

According to the US bank, the growth of corporate profits and "some help" from the US Federal Reserve could support Latin American equities in 2019 Morgan Stanley

"We expect global and local factors to increase valuation multiples in 2019," writes strategists Guilherme Paiva, Cesar Medina, Nikolaj Lippmann and Valentina Rodriguez in a report published on November 26.

According to the note sent to customers, profits in the region are expected to increase by 17% in 2019 and by 5% in 2020.

Strategists predict a 12% return in US dollars for the index MSCI Latin America target of 3,000 by the end of 2019, with a favorable risk premium based on forecasts positive 27% / negative 18% for his bull and bear cases, respectively. For Ibovespa, they estimate a target of 100,000 points, while that of the Mexican stock market is 42,000 points.

Despite the short-term pressures expected from the US adjustment cycle, it is expected that global factors may increase valuation multiples over the medium term.

"During the year, a possible Fed pause in the United States after June 2019 could be an important positive catalyst for global equities," said the strategists.

Real GDP growth in Latin America is expected to rise from + 0.9% in 2018 to + 1.5% next year and to + 2.3% in 2020.

Morgan Stanley made a recommendation Overweight for the actions of Brazil, Peru and Chile, a neutral for Argentina, and underweight for Mexico and Colombia.

The bank He loves some Brazilian state companies and recommends overweighting the energy, steel, shopping centers and transportation sectors.

Analysts recommend underweighting Brazilian beverages, retailers, pasta and banks.

In Mexico, analysts have a preference for industrial companies, companies with "high cross-border exposure, and companies that should benefit from northern risk reduction".

The main underweight recommendations concern retail trade and the media.

The ten best ideas of the bank's actions in Latin America are: Estácio Participações SA, Petróleo Brasileiro SA, Usinas Siderúrgicas de Minas Gerais SA, Odontoprev SA, CVC Brasil Operadora and Agência de Viagens SA, Banco do Brasil SA, EcoRodovias Infraestra (Brazil), Mexichem SAB of CV, Cemex SAB de CV (Mexico) and Credicorp Ltd. (Peru)