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Investing.com -- Bank of America’s June Fund Manager Survey reveals growing optimism for Brazil’s stock market, with two-thirds of participants now expecting the Ibovespa index to exceed 140,000 points, up from 43% in the previous month. Earnings expectations have also improved significantly, with 45% of respondents anticipating upward revisions this year, compared to just 22% in May.
Despite this optimism, most investors plan to position for Brazil’s elections only in the first quarter of 2026 or later, according to 57% of survey participants. Meanwhile, 64% of respondents intend to increase their allocation to equities in the next six months, the highest level since January 2024. Cash levels have risen to 7.8% in June, up from 6.1% in May and reaching the highest level since October 2023.
Sector positioning indicates investors remain most overweight in Utilities and Financials, while Consumer Discretionary saw the largest increase in allocation this month. Energy and Materials continue to be the most underweight sectors. High beta and high quality have emerged as the preferred investment strategies among participants, replacing the previous month’s preference for high quality and high dividend approaches.
The survey highlights a constructive outlook across Latin America, with investors expecting Brazil to outperform Mexico and Chile to lead among Andean markets. Respondents also anticipate further improvement in Argentine asset prices, continuing a positive trend for the country.
A stronger U.S. dollar has replaced U.S. tariffs as the main external risk according to the survey, though most participants still expect a weaker dollar this year. The Brazilian real is now mostly expected to trade between 5.41-5.70 against the dollar this year, an improvement from the previous expectation of 5.71-6.00.
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