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Capital Markets

Retail investors point to changing Brazil

The investment landscape is shifting rapidly as falling returns on sovereign fixed income assets force investors to look elsewhere for returns. Retail investors in particular are playing an important role in the transformation of local capital markets.

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Juca Andrade, B3’s chief product and client officer



Much has been made of the difference in sentiment between local and international institutional investors about the outlook for Brazil. And while these diverging views are real – and interesting – there has been very little focus on the rapid growth in retail investment in local equities.

That change may be worth noting from a behavioural perspective – the dispersion of individuals’ views on the asset class and their changing risk appetites – but, more immediately, it is having a material impact on the Brazilian stock exchange.

The exchange – called B3 since the merger of BM&F Bovespa and Cetip in March 2017 (although the main equity index is still referred to as the Bovespa) – hit an all-time high of 100,000 this year (although only “for about half an hour,” as one senior manager at the B3 ruefully points out).

Historic peak

It hit that historic peak despite a withdrawal of R$2.17 billion ($550 million) of international capital in the year to April 15. Local institutional investors largely compensated for this negative flow with positive flows of R$1.45




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