A closely-watched survey from Bank of America/Merill Lynch showed that fund managers had swung into a net 14 percent underweight on Brazil in May from a net overweight of over 20 percent in April. According to BofAML (via Reuters‘s Sunjata Rao), “this is the first time investors have turned negative on Brazil since February 2011.”
Here is what BofA ML’s analyst Nick Timberlake said about Brazil:
“Valuation signals in Brazil and companies’ profitability are not as strong as the other BRICs…and it’s fair to say there are question marks over the independence of the central bank.
(The government) has been trying to squeeze spreads on bank loans and these are not good things as far as stocks are concerned.
Prices (for Brazilian stocks) have come off a long way but what keeps me negative is my view on the Chinese economy, that it will slow further. If that happens, the biggest victims will be Brazil and Russia.”