Brazil on Rebound, Say Analysts

Brazilian markets should continue to rally, with small setbacks, throughout this year, as the country’s economy continues to recover, panelists tell a Brazilian Chamber of Commerce event in New York. “The economy looks a lot better than we expected even just a few months ago,” says Geoffrey Dennis, LatAm equity strategist at Citi, who expects the Bovespa to reach 60,000 by the end of the year, a 22.7% increase from Tuesday’s close of 48,872. He says markets have already hit bottom, and Citi expects a 0.5% contraction of Brazil GDP this year, paving the way to 4% growth in 2010. Although advising clients to be constructive on Brazilian equities in the long term, he warns stocks are a “little expensive,” at about 20x earnings, in the short term. Supported by domestic demand, Brazil is recovering faster than the global economy, and is “well-positioned to be an outperformer,” adds Drausio Giacomelli, head of EM fixed income strategy for Deutsche Bank.