Brazil Equity Strategy MVPs: Brazil looking increasingly inexpensive vs DM as global focus rotates to AI theme

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Brazil Equity Strategy MVPs: Brazil looking increasingly inexpensive vs DM as global focus rotates to AI theme

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22 Jun 2026 01:34:34 ET │ 36 pages

Brazil Equity Strategy MVPs

Brazil looking increasingly inexpensive vs DM as global focus rotates to

AI theme

Andre Mazini, CFA AC

CITI'S TAKE +55-11-4009-2017

Our MVP portfolio has outperformed the IBOV since May-15, being down -4.3% vs andre.mazini@citi.com

Ibovespa -5%. The Ibov’s sell-off over the last thirty days was likely driven by AC Gustavo Schroden

renewed market interest in the AI theme. Even within EM, markets exposed to AI-

+55-11-4009-5858related investment themes (Taiwan and Korea) continue to attract large capital

flows, while markets with limited technology exposure have lagged. After reaching a gustavo.schroden@citi.com

ACpeak of R$70b YTD in mid-April, foreign flows into Brazil have seen R$33b in Joao Pimentel

outflows making the YTD number R$37b currently. EWZ share count reached a +55-11-4009-2178

historical peak on May 19 and has decreased by 9% since. We note Brazil's 8.4x

joao.pimentel@citi.comforward P/E represents one of the widest discounts to developed markets in recent

memory. With the Iran conflict easing, oil normalizing, and the BCB retaining Gabriel Barra AC

capacity to cut rates, the risk/reward for patient allocators is increasingly looking +55-11-4009-2223

skewed to the upside. gabriel.barra@citi.com

Is Ibov becoming too cheap to ignore? — This valuation gap seems difficult to João Pedro Soares AC

justify on fundamentals alone. Brazil's corporate earnings base has proven resilient, +55-11-4009-7562

its commodity export position remains a structural advantage, and the prospect of joao.soares@citi.com

an easing cycle — however delayed — provides attractive re-rating catalysts. At