Latam fund managers bullish on Ibovespa despite growth concerns

Bank of America's latest survey reveals increased conviction among Latin America fund managers for Brazil's Ibovespa, with 83% expecting it to exceed 140,000 points and most anticipating Brazil to outperform Mexico. Despite moderated 2025 GDP growth expectations (1-2%), the economic cooling is strengthening the case for monetary easing, with 43% of respondents expecting rate cuts by year-end and BofA analysts forecasting a 50 bps cut in December 2025, ahead of market consensus. This sentiment also reflects earlier positioning for Brazil's 2025 elections, now anticipated in Q4 2025.

Analysis

Fund manager conviction regarding Brazil's Ibovespa index has strengthened considerably, with a Bank of America survey indicating 83% of respondents now expect the benchmark to exceed 140,000 points, up from 66% in the previous month. This optimism is also reflected in a consensus view that Brazil will outperform Mexico over the next six months. However, this bullish sentiment is set against a backdrop of moderating economic expectations, with most surveyed managers revising their 2025 GDP growth forecasts down to a 1%-2% range. This anticipated economic cooling has solidified the case for monetary easing, as 43% of participants now expect interest rate cuts before year-end, and Bank of America's own analysts forecast a 50 basis point cut in December 2025. Investors are also preparing to price in political factors sooner, with positioning for the 2025 elections now anticipated in Q4 2025. Critically, these survey findings do not account for the recently announced 50% U.S. blanket tariff on Brazilian goods, introducing a significant unpriced risk to the outlook.

Key Decisions for Investors

• Investors should weigh the strong bullish fund manager sentiment on the Ibovespa against the significant, unpriced risk of newly announced U.S. tariffs, as the survey data predates this development.
• Monitor Brazil's high-frequency economic data closely, as further evidence of a growth deceleration could accelerate the timeline for monetary easing, which is a primary catalyst for the market.
• Evaluate positioning for Brazil's expected outperformance relative to Mexico, while preparing for increased volatility as the market begins to factor in political risk ahead of the 2025 elections.