Brazil is pick of the BRIC’s, says Armstrong
Armstrong Investment Managers LLP (AIM), a Global Macro Multi-Asset investor has taken significant exposure to Brazilian Equities in the funds they manage and in their advisory mandates, while shunning the other BRIC countries of Russia, China & India.
Dr. Ana Cukic Armstrong, Joint Managing Partner of AIM says, “Brazil comes out on top of the BRIC's if you are looking at various value measures or yield, and we expect Brazil will deliver the most resilient growth of all the BRIC countries in the coming years. Brazil is currently trading at 18x last years earnings, while India and China are at 28x earnings, and you do not have the corporate governance issues related to Russian equities which are also at 18x earnings. Brazil is trading at 11x 2011 consensus earnings while China and India at 15x 2011 consensus earnings.
Brazil has an economy which is backed by a wide range of commodities, and it is running fiscal and current account surpluses. Last week the second stage of Brazil’s Accelerated Growth Programme (PAC II) was announced, and it will raise the investment rate of Brazil beyond the levels of the OECD, and towards other Latin American emerging markets. Brazil is targeting 21.5% of GDP to come from investment by 2014. This is a positive for the long term growth potential of the country”
Patrick Armstrong, Joint Managing Partner of AIM commented “Global rising energy and food prices have the potential to choke off growth in other emerging markets, but this will be a net positive for Brazil which is rich in a wide range of natural resources. We are bullish on the long term fundamentals for most commodities and for agricultural commodities in particular. We expect Brazil will actually benefit from the inflationary pressures created by excessive printing of money by most developed central banks and view the Real as a high yielding currency with much stronger fundamentals than USD or EUR.
We expect the $500 billion the Brazilian Government plan to invest over the next four years on infrastructure, including roads, the electric grid, railways and ports will have the potential to significantly improve productivity in Brazil. It is one of the few economies which may deliver growth in excess of expectations over the next few years."
Armstrong Investment Managers (AIM) is a specialist and independent investment boutique focused on delivering market leading risk-adjusted, inflation beating investment solutions. AIM achieve this by investing in multiple asset classes through a global strategic and tactical asset allocation program supported by advanced quantitative capabilities and driven by qualitative discretionary global macro economic views. For more information, visit multi-asset.co.uk.
