JPMorgan Raises Its Brazil Stocks Target, While Cutting Regional Peers

(Bloomberg) -- Brazil was the standout in JPMorgan's re-rating of Latin American equity markets as the firm raised its year-end price target for the Ibovespa index while lowering forecasts for the rest of the region.

Strategist Emy Shayo increased the 2019 target for the Brazilian benchmark to 108,000 from 105,900, implying about a 6% increase from current levels. The more optimistic projection is based on expectations that approval of social security reform will lead to more growth and lower risk. It comes as Brazil's weaker-than-expected economic recovery has been leading to downward revisions to earnings estimates.

“Our analysts are shrugging off Brazil growth concerns and focusing on policy
improvement driving a better investment environment,” Shayo, who has an overweight rating on the nation's equities, said in a June 24 research note. “We are confident that the approval of the social security reform should quickly ignite growth in 2H.”

Meanwhile, the target prices for Chile's IPSA, Mexico's Mexbol, Colombia's ColCap and Peruvian stocks were cut by 9.8%, 7%, 5.6% and 3.7%, respectively.

JPMorgan has an overweight rating for Colombian shares due to “good growth” and cheap valuation. The bank has a neutral stance for Chile and is underweight for Mexico and Peru. Argentine stocks were inaugurated at underweight after their recent outperformance and uncertainty around the upcoming presidential election.

--With assistance from Eduardo Thomson.

To contact the reporter on this story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Richard Richtmyer

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