Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Goldman Sachs Recommend to invest now in Brazil

Goldman Sachs Recommend to invest now in Brazil

On Thursday, Bloomberg put out a headline that it was time to buy the worst emerging market in the world - Brazil. The reason: things were so bad, they couldn't possibly get much worse.
Down more than 48% this year when measured in dollars, Brazilian stocks will benefit from growing appetite for risky assets and a recovery in commodities prices during the second half of 2020, Goldman Sachs strategists led by Kamakshya Trivedi wrote in a note to clients on May 20.

“Brazilian equities are an ideal bounceback candidate,” they said.

Brazil’s biggest risks are the twin crises of health and politics. Both are, quite literally, sick.

Brazil is poised to beat Russia soon as the second most infected coronavirus nation, trailing the U.S. They’ve been racking up about 14,000 new cases a day, with 20,000 on Monday. If Brazil keeps that pace, it will beat Russia in total cases before this month is through.

They have 291,579 cases so far to Russia’s 317,554. But Russia has peaked. Brazil hasn’t quite yet, based on Johns Hopkins University data and so there is a real risk that Brazilians will be banned from flying back to the U.S., even if they own a green card.

Why there isn’t a ban already is a mystery, but it seems like most Brazilians are not flying anyway.

The other risk is political. Opposition politicians, with nothing else better to do, want to impeach Jair Bolsonaro. At the moment, their does not seem to be any real appetite for it among the electorate.

So in the meantime, the man to watch in Bolsonaro’s cabinet is Paulo Guedes, the Economic Minister. If he stays, Wall Street’s happy. It’s one of the reasons why Goldman Sachs is throwing some love Brazil’s way.

But here is another trade that might work even better in the next few weeks than the iShares MSCI Brazil (EWZ) fund: iron ore giant, Vale.

Vale is up 30% from its low on March 23. The iShares MSCI Brazil (EWZ) is up 6.58%. Vale’s biggest competitor, Rio Tinto of Australia, is up 43.26% in the same period and Rio is the one Vale tracks.

Over the last three months, as the pandemic raged, Vale has shed 23% from its share price while Rio is down only 3.2%.

Investors have been buying Vale in expectation of today’s Chinese stimulus announcement. Whatever it will be, it will likely be supportive of infrastructure investments. So they will need more iron ore to feed their steel mills. It’s going to come from Vale and Rio. But China and Australia are at each other’s throats because of the pandemic. China slapped an 80% tariff on one Australian commodity already, barley.

If China and Hong Kong politics flare up again over a proposed national security bill, something the pro-democracy protesters will see as an end-around the 2018 uprisings over the extradition law, now shelved, then what is stopping Australia from joining with U.K. and U.S. in admonishing China for changing its One Country, Two Systems approach?

Assuming China and Australia’s relations tear a bit, Vale benefits short-term.

There are definite headwinds to the Vale story, though.

A total of 88 vessels carrying 13.51 million metric tons of iron ore arrived at major Chinese ports between May 10 and May 16, according to SMM News, a metals data source provider in China. The volumes were down 540,000 metric tons from the prior week.

For the same week, iron ore deliveries leaving Australian ports rose by 200,000 tons on the week to 15.8 million, which is around 720,000 tons more than the same period last year when there was no such thing as the SARS coronavirus 2. Also known as the “good ole days”. The proportion of Australian iron ore destined for China increased from a week ago.

Shipments that departed Brazilian ports were estimated to fall by a whopping 560,000 tons from the prior week to 4.71 million million, roughly flat from the same period last year due to work stoppages.

Brazil’s Vale has resumed operations at its distribution center in Malaysia, at the Teluk Rubiah Maritime Terminal, but the coronavirus crisis in Brazil may keep Brazilian iron ore shipments from rebounding in the near term. They’ll get there.

The market is anticipating this.

Vale will fall when and if Brazil falls. But as long as China stimulus looks good on the infrastructure side, Vale should do well.
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
NATO Members Agree to 5% Defense Spending Target by 2035
NATO Leaders Endorse Plan for Increased Defence Spending
U.S. Crude Oil Prices Drop Below $65 Amid Market Volatility
International Astronaut Team Launched to Space Station
Macron and Merz: Europe must arm itself in an unstable world
Germany and Italy Under Pressure to Repatriate $245bn of Gold from US Vaults
Iran Intensifies Crackdown on Alleged Mossad Operatives After Sabotage Claims
Trump Praises Iran’s ‘Very Weak’ Response After U.S. Strikes and Presses Israel to Pursue Peace
Oil Prices Set to Surge After US Strikes Iran
BA and Singapore Airlines Cancel Dubai Flights Amid Middle East Tensions
Trump Faces Backlash from MAGA Base Over Iran Strikes
Meta Bets $14 B on Alexandr Wang to Drive AI Ambitions
FedEx Founder Fred Smith, ‘Heart and Soul’ of the Company, Dies at 80
Chinese Factories Shift Away from U.S. Amid Trump‑Era Tariffs
Pimco Seizes Opportunity in Japan’s Dislocated Bond Market
Labubu Doll Drives Pop Mart to Status as China’s Most Valuable Toy Maker
Global Coal Demand Defies Paris Accord Goals
United States Conducts Precision Strikes on Iran’s Nuclear Sites
US strikes Iran nuclear sites, Trump says
Telegram Founder: I Will Leave My Fortune to Over 100 of My Children
16 Billion Login Credentials Leaked in Unprecedented Cybersecurity Breach
×