So if the global stock markets seem to have dislocated itself from economics and earnings reality right now, where should Brazil be trading? For better insight, stop looking at the local currency number and use the Bovespa in USD chart instead. In early 2016 the Index in USD terms traded its lows for the decade near to $10,000 pushed by the effects of a devastating economic recession and the beginning of the impeachment process for the then leader of the Government Dilma Rousseff. In April this year, as we recoiled from the full brunt of the COVID-19 led selloff, the index in USD terms fell again almost that far to $12,500 but has since rallied to over $19,000 in line with the improving global perspective. While the highs of this recovery phase have been impressive in local currency terms, the continued weakness if the Real FX has kept us nowhere near the decade highs of early 2019 ($29,400) and severely underperforming the US market which has already recovered to its record high levels this year. Until we achieve that 2019 high level, the 3rd leg down of the W is still the likeliest picture with $15800 the target and the PE opportunity will be far greater than in the public markets.
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