BlackRock: interest rates in Brazil are at attractive levels – 05/31/2023 – Market

In a scenario of deceleration in inflation in recent months, with the Selic still unchanged at the level of 13.75% per year, the Brazilian interest rate market is at attractive levels and offers some good opportunities for investors.

The assessment is by Amer Bisat, head of fixed income for emerging markets at BlackRock, one of the largest asset managers on a global scale, with around US$ 9 trillion (R$ 45.5 trillion) in assets.

“Real interest rates in Brazil seem very attractive,” stated Bisat this Tuesday (30th) during a conversation with journalists. “We are seeing good opportunities in Brazil.”

According to the specialist, even in the country’s corporate credit market, which has gone through recent turbulence in the wake of difficulties involving names like Americanas and Light, there are profitable and good quality companies on BlackRock’s radar. He declined to specify what those names are.

He added that, if the country manages to address the fiscal challenges and move forward with structural reforms that make room for a greater role of the private sector in the economy, such as tax reform, the GDP (Gross Domestic Product) has the potential to return to growth above the current pace.

Bisat said he was optimistic about the prospects for the local economy, and that the country had “enormous potential” for growth.

He preferred not to evaluate the space for the BC (Central Bank) to start cutting interest rates opened by the recent deceleration in inflation, but pondered that interest rates in the country are at very high levels and that the emerging countries of Latin America should be the first to start easing monetary conditions.

The BlackRock manager recognized, however, that the global environment is not the most favorable at the moment, with most countries living with interest rates above the historical average, a process that should lead to a slowdown in the rates of expansion of economic activity worldwide.

In the case of emerging countries, he continued, growth below that seen in recent years in China is a point of attention that may be reflected in a lower overall growth among peers.

In a changing world, the governments that react first to stand out in front of their peers will benefit the most and will enter the radar of market agents, while those that ignore the problems will remain in the background, said the expert.

“I would put Brazil in the first group. If the government works on the tax and carries out structural reforms, it has great potential.”

Bisat also stated that, in a scenario of low global growth, a risk closely monitored by global investors concerns the adoption of populist policies by governments, with increased spending and public debt.

“We know that [o aumento da] Debt tends to be bad for long-term growth,” said the expert.

He also stated that, until a few decades ago, the approach to investing in emerging markets was done in a unified manner by most investors, who considered all countries within the same bloc, which had been benefiting from major trends such as globalization and debt reduction.

Today, a more detailed analysis of the group is needed, making a selection of those countries that present better perspectives for their economies, in an environment of deglobalization and increase in government debt, said the BlackRock manager.

“I don’t mean to say that emerging markets are not interesting as an investment. I think they are very interesting and there are many opportunities. However, you cannot operate in this market as before. A new approach is needed,” said Bisat.