Asset Managers in Brazil Maintain Pessimistic Outlook for 2025 Amid Fiscal Worries

Brazilian asset managers hold a negative view for the country’s assets in 2025. This pessimism continues despite potentially more attractive price levels after a sharp decline in recent months.

Most firms adopt a defensive stance on stocks, exchange rates, and local interest rates due to concerns about debt trajectory. Vinland Capital remains cautious, as stated by manager José Monforte.

He argues that without addressing the root of the fiscal issue, expressing any optimistic position on Brazil proves challenging. As a result, Vinland continues to bet on rising interest rates.

Ibiuna Investimentos believes that without an effective response to fiscal problems, the upward movement in the yield curve may continue. They expect potential depreciation of the real, stock market volatility, and inflation expectations to persist.

The firm maintains defensive positions in the country’s assets while staying alert to potential changes in fiscal adjustment strategies. Bruno Marques from XP Asset Management expresses ongoing concern about Brazil.

Asset Managers in Brazil Maintain Pessimistic Outlook for 2025 Amid Fiscal Worries. (Photo Internet reproduction)

He finds the government’s inaction remarkable, even with recent significant economic deterioration. Marques notes a strong decline in the debt-to-GDP ratio without any indication of change.

Verde Asset, led by Luis Stuhlberger, anticipates that the inflationary impacts of the real’s devaluation will be felt throughout 2025. This may force the Central Bank to raise interest rates to levels previously considered unlikely.

Verde Asset maintains a more negative positioning, stating that the current economic model continues towards an unsustainable path. The asset managers’ pessimism stems from a lack of visible fiscal improvement.

They view the government’s current economic approach as unsustainable. Despite risk premiums already being priced in, these firms maintain their cautious outlook on Brazilian assets for the foreseeable future.