Brazil’s stock market rebounds but faces diminished outlook due to economic policy concerns. The Bovespa index rises 5.9% from recent lows but its 2025 forecast has been downgraded. Meanwhile, Mexico’s IPC index shows growth potential amid tariff uncertainties.
Brazilian stocks are experiencing a rebound following last year’s downturn, although recent confidence issues have tempered expectations, according to a Reuters poll. As investors reacted positively to undervalued domestic equities, São Paulo’s Bovespa index rose by 5.9% from a nearly 14-month low recorded on January 3. Despite this recovery, the consensus forecast for the index at the end of 2025 has been lowered compared to previous estimates, reflecting ongoing concerns about the nation’s economic policies.
The newer projections indicate that the Bovespa may end the year trading at 138,000 points, marking a 10% increase from the last close of 125,401.4 points. This adjustment stands in contrast to the November prediction of 145,000 points—5% higher than the current outlook. Analyst Regis Chinchila noted that, despite challenges like elevated interest rates, inflation, and political instability, the market saw a significant correction in December, making recovery possible.
Investor sentiment turned cautious after the government disclosed less-than-anticipated spending cuts and tax exemption plans for low-income workers, which may be difficult to balance with rising revenues. As a result, the mid-2025 forecast for the Bovespa was reduced from 137,351 to 130,000 points, constituting the fourth downward adjustment in recent surveys.
In parallel, the consensus for the Mexico IPC stock index predicts a rise to 56,711 points, a gain of about 5.6% from the most recent figure. The IPC index has seen an increase of approximately 8.5% this year, following government measures that temporarily diffused trade tariff tensions with the U.S., though President Trump has reaffirmed that tariffs are still anticipated.
Humberto Calzada, Latin America’s chief economist at Rankia Latinoamerica, characterized the IPC forecast as optimistic, suggesting it relies on potential agreements between Mexico and the U.S. Their most favorable projection suggests an endpoint of 62,674 points by year’s end.
In summary, while Brazil’s stocks exhibit signs of recovery from past declines, concerns about economic policies persist, leading to revised lower forecasts for the Bovespa index. Investor sentiment remains cautious, particularly after governmental fiscal decisions. In contrast, Mexico’s IPC index reflects a more favorable outlook despite external tariff threats, highlighting the complexities of the current economic environment in Latin America.
Original Source: www.tradingview.com
