“Things could get worse before they get better,” reads an excerpt from the bank’s report, citing expectations for the spending cuts package
Summary
Morgan Stanley downgrades Brazilian stocks to “underweight” due to fiscal deficit and rising interest rates.
THE Morgan Stanley downgraded Brazilian stocks for “underweight” – equivalent term aa sales recommendation -, in a report published this week. The text cites the growing fiscal deficit combined with rising interest rates as the main reasons for the recommendation.
Receive the main news directly on WhatsApp! Subscribe to the Terra channel
According to the report, authored by analysts Nikolaj Lippmann, Juan Ayala and Julia Nogueira, high interest rates make fixed income more attractive than the stock market.
“Public financing is taking away oxygen from the local variable income market,” reads an extract from the document. For analysts, those who invest in fixed income will be able to double their money within 6-7 years. “Local stocks cannot compete with this,” the report reads.
If government spending remains high, the expectation is that the Central Bank will continue the cycle of raising interest rates to control inflation.
The bank also cites the Ministry of Finance’s promise to soon present spending reduction measures. Despite the positive outlook, Morgan Stanley analysts believe “things could get worse before they get better.”
In recent weeks, Minister Fernando Haddad has made some statements on the package of spending cuts. In all cases, he said negotiations within the government were at an advanced stage. However, it was believed that the measures had already been announced, an expectation that was frustrated. Now it is expected that, with the end of the G20, the package will finally be released.
Source: Terra
Rose James is a Gossipify movie and series reviewer known for her in-depth analysis and unique perspective on the latest releases. With a background in film studies, she provides engaging and informative reviews, and keeps readers up to date with industry trends and emerging talents.
