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Investing.com - Investor sentiment on Brazil has declined amid concerns over potential U.S. tariffs, according to a Bank of America survey released Monday.
The survey revealed a divided outlook among investors regarding U.S. tariff tensions, with approximately half of participants expecting de-escalation of tariff pressures on Brazil and Mexico, while the remainder either anticipate escalation or remain uncertain. U.S. tariffs and an American economic slowdown have emerged as the primary external tail risks for the Latin American region, replacing previous concerns about a strong U.S. dollar and interest rates.
Brazilian market confidence has notably weakened, with only 45% of survey respondents now projecting Brazil’s Ibovespa index to exceed 140,000 points by the end of 2025, down significantly from 83% in the previous month’s survey. Similarly, just 35% expect Brazil to outperform Mexico in the next six months, compared to 77% in the prior survey.
Investor cash levels remained elevated at 6.2%, above the historical average of 5.4%, indicating continued caution. The survey showed a rotation away from high-beta investments toward value and high-quality strategies, with financials and utilities remaining the most overweight sectors while consumer discretionary fell to underweight status.
For other Latin American markets, the survey indicated Chile could outperform regional peers, while higher copper prices were identified as the main risk factor for Andean economies, cited by 55% of participants compared to 40% in the previous month’s survey.
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