See the best investments in May – 06/01/2023 – Market

The “small caps”, shares of companies with a market value lower than that of large companies on the Exchange, were those that offered the best return in May, according to a survey by investment search engine Yubb.

The small caps index of the Brazilian Stock Exchange had an accumulated appreciation of 13.54% last month, leading the investments considered in the search engine ranking.

The roles tend to be from companies with smaller consumption sizes and from the real estate sector, more linked to the domestic economy. Unlike Vale and Petrobras, for example, which are more impacted by commodity prices on the foreign market, small caps are more sensitive to interest rates and tend to benefit from projections of cuts in the Selic rate.

Savings, the most popular investment in the country, appreciated by 0.72%. Despite having stayed above the inflation measured by the IPCA-15, which rose 0.58% in the period, the application was in last place among those that appreciated in May.

That’s why small caps have been pointed out by specialists as candidates to have a positive highlight this year, given the strength that interest rate reduction projections have been gaining in the next semester.

Following small caps, BDRs (Brazilian Depositary Receipts) ranked second, with an average yield of 5.90%. Receipts are traded on the Brazilian stock exchange and replicate indexes of foreign companies.

The performance takes place in a positive month for some of the main stock markets in the United States, a favorite destination for investments made by local managers. The S&P 500, which brings together the largest companies in the country, rose 0.26% in the period, while the Nasdaq, of technology companies, rose 5.80%.

Completing the podium, real estate funds were in third place and the Ifix (Real Estate Investment Funds Index), which measures the average performance of these assets, appreciated by 5.43% in May.

Among the 16 investments analyzed, gold and bitcoin were in the last two positions, being the only ones with devaluation in the period. Ethereum, in turn, another major cryptocurrency, rose by 1.40%

The Ibovespa, the reference index of the Brazilian Stock Exchange, ended the month up 3.74%, marking the second consecutive month of gains. The approval of the fiscal framework in the Chamber of Deputies and better than expected inflation data, which reduced interest projections for this year, contributed to the good performance of the index.

Dividends paid to shareholders underperformed, with B3’s Idiv (Dividend Index) yielding 4.58%.

The dollar also proved to be resistant and rose 1.72%, despite having recorded significant declines over the month. The American currency closed the last trading session of May at R$ 5.074.

With the expectation of a drop in the Selic this year, small caps should continue their upward trend, especially shares of consumer companies, the real estate sector and capital goods, which are more sensitive to fluctuations in interest rates.

In the United States, there are still doubts about the next interest rate decisions by the Fed (Federal Reserve, the American central bank), and bets of a new rise in rates have gained strength in the last month.

Speculation has supported the dollar, since, with the interest differential between Brazil and the US, American fixed income becomes more attractive, which benefits the country’s currency.

The market consensus, however, is still that the Fed should pause interest rates at its next meeting, scheduled for June 14. A scenario of lower interest rates would favor American companies listed on the stock exchange and could help boost US indices.