Wednesday, 17 December 2008

Barclays Recommends Bonds Over Stocks in Brazil

Paulo Hermanny, Barclays Capital's strategist for Latin America, yesterday issued a report favouring bonds over stocks in Brazil. Hermanny is betting that the central bank will cut interest rates as early as January, and see no clear signs that the Bovespa stock index will recover until after the second quarter of 2009. 

This reinforces the view that 2009 won't be a good year for stocks and that it seems better to wait before puring more money into the Bovespa. Some say that now is the time to buy because stocks are ``cheap.'' Cheap for who? Are you sure you won't be able to buy even cheaper?

Economic growth is losing momentum rapidly in Brazil (see yesterday's posting on Morgan Stanley's Carvalho) but many investors remain hopeful that the slowdown will be temporary. Nothing more far from reality.  

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