Brazilian Hedge Funds Are Betting Big on Stocks
Brazil’s top hedge fund managers are increasing bets that the stock market will be the best place to profit from the government’s expanding reform agenda.
Firms including Verde Asset Management, which has almost 40 billion reais ($10.1 billion) under management, and Bahia Asset Management increased their holdings of local equities after the pension system overhaul cleared its biggest hurdle in the lower house last month. BlueLine Asset Management, which recently launched its first fund, is favoring Brazilian shares over all other asset classes in Latin America.
“Brazil has the chance to approve two important reforms this year — pension and tax — and there’s an ongoing, global process of falling interest rates,” BlueLine’s Chief Investment Officer Giovani Silva, said at an event on Wednesday in Bloomberg‘s Sao Paulo office.
After Brazil’s lower house approved the pension reform in a second-round this week, the bill, which foresees savings of about 930 billion reais over 10 years, moves to the Senate. The reform’s outcome was “better than the most optimistic forecast” from some months ago, Verde said in a monthly note to clients. “It puts the country into a healthier fiscal trajectory and allows for structurally lower interest rates.”
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