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Between a Rock and a Hard Place: Outlook for Brazil
December 01, 2014 at 19:00 PM EST
Investors in Brazil have had the dubious pleasure of undergoing one of the more stomach-churning rides in 2014. In U.S.-dollar terms, Brazilian equities rallied roughly 40% from their spring lows through early September, before surrendering all of those gains following a disappointing election outcome. Although the sell-off of the past few months has pummeled valuations, bargain investors might be better off looking elsewhere for a more promising emerging-market opportunity. Here are the reasons why: Brazilian equities currently appear undervalued, but they have been cheaper before. The market is recently trading at about 10x price-to-earnings ratio and 1.20x price-to-book value, making valuations low, but we have seen lower prices in early 2003. On a relative basis, while Brazilian equities now trade at a 15% discount to other emerging markets, this is still above their long-term trend. Over the past 15 years, the discount was typically around 22% and swelled to 35% […] Click here to read the original article on ETFdb.com. Related Posts: No Related Posts
Investors in Brazil have had the dubious pleasure of undergoing one of the more stomach-churning rides in 2014. In U.S.-dollar terms, Brazilian equities rallied roughly 40% from their spring lows through early September, before surrendering all of those gains following a disappointing election outcome. Although the sell-off of the past few months has pummeled valuations, bargain investors might be better off looking elsewhere for a more promising emerging-market opportunity. Here are the reasons why: Brazilian equities currently appear undervalued, but they have been cheaper before. The market is recently trading at about 10x price-to-earnings ratio and 1.20x price-to-book value, making valuations low, but we have seen lower prices in early 2003. On a relative basis, while Brazilian equities now trade at a 15% discount to other emerging markets, this is still above their long-term trend. Over the past 15 years, the discount was typically around 22% and swelled to 35% […]
