{"id":439635,"date":"2026-10-07T21:40:06","date_gmt":"2026-10-07T14:40:06","guid":{"rendered":"https:\/\/www.swingfish.trade\/blog\/market-news\/morgan-stanley-upgrades-brazil-to-overweight-sees-another-10-in-stocks-and-brl-by-year-end-439635\/"},"modified":"2026-10-07T21:40:06","modified_gmt":"2026-10-07T14:40:06","slug":"morgan-stanley-upgrades-brazil-to-overweight-sees-another-10-in-stocks-and-brl-by-year-end","status":"publish","type":"post","link":"https:\/\/www.swingfish.trade\/blog\/market-news\/morgan-stanley-upgrades-brazil-to-overweight-sees-another-10-in-stocks-and-brl-by-year-end-439635\/","title":{"rendered":"Morgan Stanley upgrades Brazil to overweight, sees another 10% in stocks and BRL by year-end"},"content":{"rendered":"<div>\n<p>Brazil had a monster day on Monday and Morgan Stanley isn&#8217;t fading it. The LatAm equity strategy team upgraded Brazil to overweight late on Monday. They call it the start of the market&#8217;s &#8220;honeymoon stage&#8221; with Flavio Bolsonaro, and they see room for a further 10% in equities and 10% in the real by year-end as risk premia compress.<\/p>\n<p>For context, MSCI Brazil gained 12.5% in USD terms on the day. MSCI EM rose 1.6%, Mexico 1.1% and the S&amp;P 500 0.7%. The EWZ Brazil ETF is shown here:<\/p>\n<\/p>\n<p>The core of the call is less about the election and more about plumbing. MS argues Brazilian investors have been crowded out of stocks for years by record-high real rates. Local allocations to equities sit around 5%, barely above the all-time low of 4.6%. That compares with an 8.5% historical average and a 15% peak. If fiscal consolidation brings rates down, they see a multiyear rotation from debt into equity.<\/p>\n<p dir=\"ltr\">The flow math:<\/p>\n<ul dir=\"ltr\">\n<li>Brazil&#8217;s free float is about US$500 billion<\/li>\n<li>Potential new demand: US$30-40bn local, US$10-20bn EM, US$30-40bn global<\/li>\n<li>That&#8217;s up to US$100bn chasing a US$500bn float<\/li>\n<\/ul>\n<p>That&#8217;s a lot of money for a market trading around 9.5x forward earnings. Booming commodities are also a big tailwind in the commodity-heavy market with rapidly-growing oil production.<\/p>\n<p dir=\"ltr\">The broader regional angle is that Brazil&#8217;s vote follows Chile, Argentina, Peru and Colombia in a shift away from left-wing populism. MS argues that should lower the region&#8217;s cost of capital and tighten alignment with the US.<\/p>\n<p dir=\"ltr\">What could go wrong? MS flags it themselves. The vote still needs to go to a second round. Bolsonaro leadthe first-round poll\u00a047-44% but he&#8217;s hardly a guarantee and beyond that, fiscal consolidation is described as &#8220;a must.&#8221; Brazil has a long history of markets pricing fiscal discipline before it shows up. Investment\/GDP is just 17%, among the lowest in the region, and MS concedes the transition &#8220;will likely take years.&#8221;<\/p>\n<\/p>\n<p>                            This article was written by Adam Button at investinglive.com.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Brazil had a monster day on Monday and Morgan Stanley isn&#8217;t fading it. The LatAm equity strategy team upgraded Brazil to overweight late on Monday. They call it the start of the&hellip;<\/p>\n","protected":false},"author":216,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[86],"tags":[],"class_list":["post-439635","post","type-post","status-publish","format-standard","hentry","category-market-news"],"_links":{"self":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/users\/216"}],"replies":[{"embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/comments?post=439635"}],"version-history":[{"count":0,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/posts\/439635\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/media?parent=439635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/categories?post=439635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.swingfish.trade\/blog\/wp-json\/wp\/v2\/tags?post=439635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}