BofA: International investor does not fear Lula's eventual re-election

Foreign investors "are not afraid of Lula", noted, in conversations with clients, David Beker, head of Economics in Brazil and Strategy for Latin America at BofA (Bank of America).

The economist observes that capital flows have not favored Brazil, but that this is due more to international factors - expectations of rising interest rates in the United States, allocations to artificial intelligence and the cooling of tension in the Middle East, which reduced oil prices beyond expectations - than domestic ones.

The analyzes were reviewed this Friday (3), in São Paulo, during a meeting with journalists.

When asked about uncertainties surrounding the October elections, Beker highlighted that foreign investors do not fear a re-election of the President of the Republic, Luiz Inácio Lula da Silva (PT), as they already know the candidate.

Still, he recognized that the market is acting on the news linked to the election. However, the noise makes it difficult to form more structural positions, so investors who operate in this direction focus more on short-term trades.

Lack of triggers
BofA worked with the hypothesis that the Ibovespa would reach 210 thousand this year, amid the rally that took the stock market to an all-time record of 195 thousand points in April.

Since then, however, the index has started to fall, closing the first half at around 172 thousand points, with a sequence of negative months.

The momentum slowed and there was a "reduction of foreigners in all assets", according to Beker, who highlights that international capital was the main driver of the stock market.

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For him, the uncertain external macroeconomic scenario is the main culprit for the change in direction of foreign investors.

And negatively for the stock market, he mentions that there are no expectations of major triggers for the Brazilian market to resume the rally seen previously.

At this moment, notice how, above all, the local fund industry has suffered from investor redemptions. For Beker, the only thing that could generate a change in the scenario would be a greater than expected drop in interest rates.

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Source: CNN