Equities: To Outperform EM, But Not Yet Bullish

Brazil's Bovespa equity index bounced strongly on September 7, up 2.93% on the day, taking the bourse back above the 56,000 level. The picture is still very volatile, with domestic and global concerns combining in August to send the index down 20%, before recovering almost all its losses by the end of the month. However, we are beginning to ask whether the bottom has now been reached, and with valuations looking cheap, both historically and compared to regional and global EM peers, we see a strong case for Brazilian equities to outperform other EM markets over the next six-to-12 months.

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