Brazil: The effects of fiscal impulse

Buysidebrazil

Buysidebrazil’s latest report examines the effects of fiscal impulses on the investment decisions and capital structure of Brazilian companies listed on B3. They find that an expansionary fiscal shock of 1% of GDP is associated with: (i) a reduction of up to 4.14% in the investment rate after one quarter; (ii) a decline of up to 2.77% in leverage after six quarters; and (iii) an increase of up to 4.73% in cash liquidity after three quarters. This behaviour signals bad news for productivity and long-term development, since persistent private investment retraction compromises capital accumulation and the incorporation of new technologies, reinforcing the productive stagnation that has characterized the Brazilian economy in recent decades. As for the year ahead, the team project the exchange rate at BRL 5.50/USD, expect continued disinflation and further deceleration in economic activity, and the beginning of a monetary easing cycle.

- 09 January, 2026

Overlooked opportunities in YWR’s QARV rankings

Your Weekend Reading

Why do China, shipping, iron ore, hardware, Brazil… all stand out if you screen high ROE’s with low valuation? Erik@YWR sees it as scepticism about global growth on which he is taking a contrarian view. Following this month’s review of YWR’s QARV rankings key themes include: 1) A massive China bull market has only just begun. 2) Opportunities in iron ore, where Fortescue, Rio Tinto and Kumba are delivering ~20% ROEs at <12x P/E despite China’s property crash. 3) The Taiwanese semiconductor supply chain stands out as highly profitable and undervalued. Everyone focuses on Nvidia and the datacentre buildout but misses the whole Taiwanese supply chain behind this. Tokyo Electron and ASML also screen well. 4) Brazil is overlooked, with names like Itau, Vale, Ambev and B3 all screening well. 5) Container shipping - supply-chain diversification could sustain tighter freight rates than investors expect.

- 19 September, 2025

EM Exchanges: Brazilian exchange B3 stands out

Financials

Galliano's Financials Research

Victor Galliano sticks with B3 as his core value pick; it has a growing share of data revenues, its post-trade revenues are understated and equity fee pressure is easing. He keeps Hong Kong Exchange as a buy, with its high share of post-trade revenues; its shares have been highly volatile, but represent relative value combined with growth potential. Philippine Stock Exchange and BSE are new additions to Victor’s coverage of EM exchanges with PSE being one to watch; MexBolsa is deep value but lacking a re-rating catalyst.

- 24 January, 2025

FinTech & Financials: 2022 investment themes

Financials

Galliano's Financials Research

1. A shift into value in EM banks; cautious on digital banks - top picks are Sberbank, Banco do Brasil and HDFC Bank. Nubank likely to be one of the EM FinTech big negative surprises of 2022.
2. Southern Europe banks, position for the prospect of higher interest rates - highlights BBVA and Banco BPM.
3. Exchanges, competitive pressures are real, but are they priced in - B3 and Singapore Exchange standout.
4. Growth and value in digital payments - highlights Mastercard and, for its deep value, PagSeguro.
5. Digital wealth managers, picking a potential winner - BTG Pactual.

- 07 January, 2022

Exchanges - More than just trading places

Financials

Galliano's Financials Research

Galliano believes SGX is one exchange to watch. Management has more to do to diversify the revenue base, yet its valuations are relatively undemanding and the market’s competition concerns, as in the case of B3, may be overdone.

- 15 October, 2021