Plenty of Upside Seen in Brazil Equities

Brazil’s main large cap stocks still have plenty of room for higher valuations, in the view of William Landers, manager of asset manager BlackRock’s $732m LatAm fund. “We don’t think there’s a valuation bubble here,” said Landers, speaking Tuesday at a luncheon. Over 60% of the fund is dedicated to Brazil, where Landers sees the most growth opportunity versus the rest of the region. “Many large cap names are trading in line or at a discount to their EM peers,” notes Landers, pointing to CVRD which trades at 16.40x its earnings, a discount to BHP Billiton’s 17.12x, according to Reuters. Unlike their Brazil counterparts, Chilean stocks have the most to lose in the region, says Landers, who points to an average PE ratio of 20.4 for Chilean stocks, compared to 10.5 for Brazil and 15.2 in Mexico.