This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

5 Investment Ideas From Wall Street: Jan. 27

2) Brazil Gets a Leg Up

Brazil is getting a large share of inflows to emerging markets so far this year. That might be because of the country's flexible approach to monetary policy.

As risk aversion fades, JP Morgan writes that inflows have been key for a market rebound. Some 36% of inflows to emerging market equity funds went to Brazil. The Ibovespa, an index of about 50 stocks on the Sao Paulo Stock, Mercantile & Futures Exchange, is up more than 10% this January and foreigners have poured in $2.7 billion year to date, notes the firm.

After a horrible year for the Latin American market in 2011, Brazil in particular is seeing a strong turnaround. Last year, foreigners put 74% less into than Brazilian market than they did in 2010. This year, a surge in foreign inflows is suggesting that investors from abroad are a lot more risk inclined. In fact, JP Morgan notes that they're even quicker to catch on than their Brazilian counterparts are.

"Foreign investors reached 39% of Bovespa total volume (the best mark since March 2006) and ended 2011 as the main investor class of the Brazilian stock exchange. On the opposite side, retail investors flew from the Bovespa, as December registered their weakest participation since the beginning of the historical series. Retail investors now account for only 18% of total Bovespa volume. This last category suffered significant losses compared to last year, when their average participation reached 26.5%. Institutional investors' participation remained flat in December with 32% of the market share."

As for why the firm is bullish on Brazil for 2012, it says that the macro environment is supportive. "We see Brazil as the country with the most policy flexibility in the emerging market universe, with the capacity to continue to cut interest rates and provide for fiscal stimulus if growth were to weaken," the analysts write, also noting that inflation seems to be easing this year.

The Bovespa Index current trades at 63,607 and JP Morgan analysts are forecasting 73,000 by the year end. That's a near 15% rise for the year. The firm recommends that investors buy cyclical stocks in Brazil. Think banks, homebuilders and retail.

2 of 5

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
VWO $33.95 -0.12%
GMM $54.57 0.28%
PKX $36.52 -0.06%
CHL $57.26 -0.97%
GOOG $743.99 -0.84%


Chart of I:DJI
DOW 17,747.92 -50.57 -0.28%
S&P 500 2,082.76 -7.35 -0.35%
NASDAQ 5,106.2210 -21.3040 -0.42%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs