Goldman Sachs Sees a Massive Late-Year Rally in Brazil (EWZ)
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Rating Summary:
10 Buy, 11 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Analysts at Goldman Sachs are making a case that Brazilian stocks could have the right conditions in place by late 2010 for a major rally.
The firm said interest rates will no longer be rising, or will be close to the end, Petrobras (NYSE: PBR) will have its massive $25B equity offering done, elections will be settled, and Christmas selling season will be approaching fueled by the biggest block of obligatory "13th month" salaries ever.
While the firm sees this large Brazil rally, they say its a tough call if investors should get in now. On one hand you have asymmetric upside potential versus downside risk in many Brazilian names. On the other hand, you have the technical weight of the Petrobras offering.
Nevertheless, conditions are tempting in Brazil the firm contends.
The firm expects 5.3% GDP growth in 2H2010 and 2011. They also expect a leveling off of recent dips in commodity prices as China is signaling a re-easing of financial conditions, financial risk in Europe now seems contained, and a true double-dip in the U.S. is unlikely.
The firm removed bank holding company Itausa from the Focus List as it moves closer to a full commodity weighting.
Related ETFs: iShares MSCI Brazil Index (NYSE: EWZ)
The firm said interest rates will no longer be rising, or will be close to the end, Petrobras (NYSE: PBR) will have its massive $25B equity offering done, elections will be settled, and Christmas selling season will be approaching fueled by the biggest block of obligatory "13th month" salaries ever.
While the firm sees this large Brazil rally, they say its a tough call if investors should get in now. On one hand you have asymmetric upside potential versus downside risk in many Brazilian names. On the other hand, you have the technical weight of the Petrobras offering.
Nevertheless, conditions are tempting in Brazil the firm contends.
The firm expects 5.3% GDP growth in 2H2010 and 2011. They also expect a leveling off of recent dips in commodity prices as China is signaling a re-easing of financial conditions, financial risk in Europe now seems contained, and a true double-dip in the U.S. is unlikely.
The firm removed bank holding company Itausa from the Focus List as it moves closer to a full commodity weighting.
Related ETFs: iShares MSCI Brazil Index (NYSE: EWZ)
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