Carmignacs EM-Fondsmanager Hovasse: Was es bei Brasilien nun zu beachten gilt

That said, even as the political show goes on, most of the country’s economic indicators have shown first signs of improvement. Its current account balance is on the mend thanks to a weak currency, with a deficit that has now receded to below 3% of GDP. This welcome decrease has gone hand-in-hand with a growing inflow of foreign direct investment, which suggests that investor confidence is recovering. Inflation also seems to be moving in a favourable direction and, while it is still in double digits, the inflection point now appears to be behind us. All this has prompted us to increase our allocation to Brazil earlier this year. We had taken a stake in CCR, a diversified industrial group with highway and other infrastructure concessions. Not only does the company have solid growth prospects; it also displays a degree of financial discipline that fully meets our standards. Its return on equity is in the vicinity of 30%. For that reason, CCR is a perfect fit with our investment process. More recently, we added a position in Brazil’s leading insurer BB Seguridade, a company offering a 50% return on equity, far above its local and global listed peers. Insurance is an underpenetrated sector in Brazil, thus offering long-term growth potential, particularly life insurance where BB Seguridade has a strong exposure. We also doubled our exposure to MercadoLibre, the undisputed e-commerce leader throughout Latin America. This online retailer has a particularly strong presence in Brazil and Argentina, where it earns respectively 50% and 25% of its profits."

Xavier Hovasse, Emerging Markets Fondsmanager, Carmignac