Brazil’s Overlooked Small Caps Are Starting to Appear Cheap

A flood of foreign money into Brazil’s largest companies in Q1 has pushed small-cap stocks to their cheapest relative valuation versus larger peers in over six years. Investors warn the concentration of flows toward big names may have gone too far, raising valuation- and positioning-related downside risks for small-cap returns if flows reverse.

Analysis

A flood of foreign money into Brazil’s largest companies in Q1 has pushed small-cap stocks to their cheapest relative valuation versus larger peers in over six years. Investors warn the concentration of flows toward big names may have gone too far, raising valuation- and positioning-related downside risks for small-cap returns if flows reverse.