After a stellar year, is there still time to enjoy Brazil’s bullish stock market?

Ibovespa, Brazil’s benchmark stock index, finished 2019 in style, amassing a 31.58-percent yearly gain that capped off the fourth consecutive year of Brazil’s bull market. After starting 2020 by reaching a new record of 118,000 base points, geopolitical tensions involving Iran and the U.S. saw Ibovespa wobble at the beginning of the new year, but perspectives remain bright on the back of Brazil’s economic recovery. 

Financial agents’ macroeconomic prospects—measured by Central Bank’s Focus Report—point to a strong year, with 2.3-percent expected GDP growth coupled with a well-behaved 3.60 percent inflation and benchmark interest parked at their lowest levels ever.

A stronger economy is expected to boost companies’ profits, thus reflecting on their share prices. At the same time, low interest rates make riskier investments—such as trading stocks—more attractive. 

Fund managers consulted by XP Research are overwhelmingly positive about stocks in Brazil: 56 percent are gambling on yearly gains of between 10 and 20 percent for Ibovespa in 2020, while another 19 percent see gains higher than 20 percent. Only 3 percent believe the index will suffer a...