Ibovespa at 150,000 points: have Brazilian stocks become too expensive?

Ibovespa started November successful ecstasy. On Monday, November 3^rd, the main B3 scale reached caller regular and closing records by surpassing 150,000 points. The scale reaches a precocious of implicit 25% successful 2025 and already surpasses 21-year closing records.

But did the Brazilian stocks now, successful the heights of their punctuation, go excessively expensive? Market agents accidental no. There is inactive abstraction for valuing, and stocks are inactive cheap, they affirm.

To measurement whether the scale is valuing, analysts analyse the price-to-earnings (P/E) ratio, which indicates however galore times the banal terms is worthy the yearly net of the indexed companies.

According to Bloomberg information compiled by Nord Investments, by EXAME’S request, existent Ibovespa P/E is of 10,3 times, which is beneath the historical mean of 13,92 times of the past 10 years. For comparison, the fig was of 38,86 times successful 2020, 7,21 times successful 2021, 5,76 times successful 2022, 9,46 times successful 2023 and 9,08 times successful 2024, according to the consultancy.

“The information is that contempt this high, determination is inactive abstraction for valuing, particularly if immoderate triggers are confirmed, specified as, for instance, a stronger driblet successful Brazil’s existent involvement rates and advancements successful the fiscal agenda”, affirms Fábio Murad, economist and CEO of Super-ETF Educação.

“The banal marketplace keeps dealing with numbers beneath the historical mean and immoderate sectors similar banks and vigor are inactive being considered arsenic discounted by the board”, says the analyst.

Brazilian stocks are besides inexpensive successful narration to emerging pairs

Compared to different emerging markets, Brazil is the second-cheapest, lone down Turkey, according to a Nest Asset Management survey.

While Brazil and Turkey woody adjacent to 10 times aboriginal profits, Mexico, Argentina and China are person to 15 times, and Australia and India are implicit 20 times. This means that, successful narration to planetary pairs, the capitalist inactive finds opportunities successful the Brazilian stocks, and determination is worth imaginable if planetary markets support positive.

In dollars, Ibovespa has accrued 40,24% this year, supra the 33,63% emerging marketplace average. According to Luis Castro da Fonseca, founding chap of Nest Asset, aboriginal improvement volition beryllium connected the planetary scenario, which is already not that cheap.

“Looking astatine this year’s end, we judge that Brazil should proceed pursuing the inclination of planetary markets and peculiarly of emerging ones. If these markets support connected the bully performance, truthful should Brazil. Markets overseas aren’t ace costly however, truthful its not truthful large a certainty that they volition support connected doing good successful this past quarter”, evaluates Fonseca.

According to the manager, what is moving successful favour of Ibovespa is that, historically, the past 4th of the twelvemonth has received affirmative feedback successful the planetary market. “If you look astatine S&P 500, successful the past 10 years, the lone clip successful which the 3rd 4th was antagonistic was successful 2018”, helium remembers.

Where tin the stocks go?

Ibovespa’s show has besides been reigniting an aged anticipation among investors of the celebrated “end-of-year rally”. Traditional successful the markets, the precocious tendency, which usually ends the calendar with earnings, was absent successful 2024, but is present backmost connected the radar with a caller signifier of banal optimism.

“Stocks could easy ascent more, thing similar 10-20% successful dollars, without becoming expensive. It is hard to foretell if this would hap by year's extremity oregon by aboriginal adjacent year, but if the planetary script remains positive, this question mightiness happen”, says Fonseca.

Analysts are not of a unanimous sentiment astir the spot of an eventual surge betwixt November and December, but determination are those who estimation that indexes volition decorativeness 2025 successful the enactment of 155 1000 to 150 1000 points.