Brazil Equities Flow of Funds Flow Uncertainty, to Say the Least

Research evidence excerpt

Brazil Equities Flow of Funds Flow Uncertainty, to Say the Least

J P M O R G A N Global Markets Strategy

15 May 2026

Brazil Equities Flow of Funds

Flow Uncertainty, to Say the Least

From a strategy standpoint, even though the EWZ is down by 4.1% since the Co-head of Emerging Markets Equity

start of the war (after being up by 8%), we think the political events of the past Strategy and Head of LatAm and

couple of days do not offer an opportunity to enter. The key reasons behind Brazil Strategy

Brazil’s market decline are more external than internal. We believe investors Emy Shayo Cherman AC

would need the opening of the Strait of Hormuz, lower oil prices and a (55-11) 4950-6684

retrenchment of Treasuries to start buying again. For foreign investors, the emy.shayo@jpmorgan.com

downside risk is greater considering the BRL appears asymmetrical to the strong Cinthya M Mizuguchi

side. From the foreign flow perspective, over R$17 billion (about US$3.5bn) left (55-11) 4950-6560

cinthya.mizuguchi@jpmorgan.com

Brazil since April 15. For the past 18 business days (up to May 12) there were 16 Banco J.P. Morgan S.A.

days of outflows. During this period, 25% of the inflow that came into Brazil up

to mid April exited the country. What’s next? Below we discuss the arguments for

both sides, reasons behind the flow redemption and how politics will influence that

going forward. So let’s revise the arguments:

• Inflows to Resume? We trace back moments in the last 10 years when there

were more than R$10 billions of foreign outflows during a rolling period of 15

days. We found 12 drawdowns of that magnitude (or higher) of which 2 took

place at the onset of Covid. The Covid outflows were the ones that lasted longer

and that had the most withdrawals. All others were much shorter, with a time