You are visiting Luxembourg

If this is incorrect,





Postcard from Brazil



During the past few months, members of the Comgest Emerging Markets Team travelled to Brazil, a country which has seen significant volatility in the past 30 years in both economic and financial market terms, culminating recently in the deepest recession the country has endured in over 100 years. This postcard sets out to document our major findings - both at the broad top-down level but of course mostly through the lens of individual companies - and should, by extension, help explain our current positioning. 

Previewing our conclusion, now is an exciting time to be invested in Brazil. The country is at an important juncture where the opportunity to dictate its own trajectory lies much more in its own hands than has been the case for some time. This is being helped by a benign external environment with low interest rates internationally and decent, albeit moderate growth. With limited exports to GDP, at 12.5%1, we believe Brazil is relatively immune to the slowdown in global trade, while at the same time having the ability to make important domestic reforms. Although it doesn’t enjoy the tail-winds of the high commodity prices of the 2000s, it does have other factors supporting it, including a social backdrop seemingly in favour of change as witnessed by the rejection of 14 years of government by the leftist Workers’ Party (PT). The extent to which this can be converted into structural reforms, together with the increasing application of technology to improve efficiency, will help dictate the growth potential over the coming years. A cyclical recovery in both GDP - together with several potentially secular trends - could lead to one of the more positive phases in Brazil’s development. Allied to this, we are seeing a strong company profits recovery, in particular in the Brazilian stocks held in our Global Emerging Markets and Latin America portfolios2, with decent top line recovery but especially stronger EPS growth as companies benefit from the operational gearing awarded by their recent cost cutting and the output gap.

In total we have held over 100 company meetings since September 2019, many at senior management level, and would categorise our findings into 4 broad segments:

- New Policy Direction and Reforms
- Economic Recovery – not just a return to mean
- Increasing Confidence in the Stock Market; the switch from Fixed Income
- Leapfrogging – The Influence of Technology 

Read the full article

This communication has not been updated since publication. The views expressed are valid at the time of publication only and may not reflect current thinking.

1Source: Brazil Ministry of Economy
2Comgest’s representative accounts of the Latin America Equities Composite and Global Emerging Markets Equities Composite, respectively. The representative accounts discussed are managed in accordance with their respective Composite since the Composite’s inception. 



The following section of the website is reserved for professional/qualified investors, as defined by the Markets in Financial Instruments Directive 2014/65/EU or as defined  in your jurisdiction. Access to this site requires you to read and accept the Terms of Use for this website (including the Privacy & Cookie policies). The following pages of the website may include information on Comgest funds. Documents available on this site must not be taken, transmitted or distributed (directly or indirectly) into any jurisdiction where the Funds are not authorised for distribution.

This site is not intended for citizens or residents of the United States of America or for any “U.S. Person” as this term is defined in SEC Regulation S under the U.S. Securities Act of 1933.

By clicking "Accept", I confirm that I have read and accept the Terms of Use of this website (including the Privacy & Cookie policies) and that I am a Professional/Qualified investor as defined in my jurisdiction.