Latam Equity Quant: Investor mood deteriorates in LatAm

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Latam Equity Quant: Investor mood deteriorates in LatAm

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Latam Equity Quant

Investor mood deteriorates in LatAm

Investment Strategy

Key takeaways 22 May 2026

Investment Strategy• Mood among investors in LatAm has turned more negative. We saw R$11bn in foreign

Latin America outflows via cash from B3 this month.

• Consensus expectations for 2026 EPS growth in Brazilian domestic sectors have been

revised down in recent months.

• We have seen limited outflows from Brazil equity funds in recent weeks.

This week in numbers

Performance of the week. The Ibovespa +1.6%, Mexico +0.5%, versus S&P 500 +0.5%

and EM down 1.8% in USD total return terms. Our quantitative screen of “Brazilian

David Beker >>

Magnificent 7” stocks, (Mercado Libre, Nubank, WEG, BTG Pactual, Raia Drogasil, Bz Econ/FI & LatAm EQ Strategy

Localiza, and Itaú), which has a growth bias, is +2.8% this week. Our “Unforgettable 7” Merrill+55 11Lynch2188 (Brazil)4371

screening (Petrobras, Vale, JBS, Banco do Brasil, Ambev, Bradesco, Gerdau), which has a david.beker@bofa.com

value bias, is +2.8% this week. Paula Andrea Soto, CFA >>

LatAm Equity Strategist

Mood in LatAm has turned more negative, with foreign investors more worried about Merrill+55 11Lynch2188 (Brazil)4226

higher global yields and political risks. In Brazil, foreign outflows from B3 increased last paula.soto@bofa.com

month (-R$11bn via cash in May), although YTD flows remain positive at R$45bn. Carlos Peyrelongue >>

Mex Eq Strat/Research Analyst

Even after the recent correction, valuations in LatAm are still not seen as attractive Merrill+52 55Lynch5201 (Mexico)3276

enough (Exhibit 9). The strong rally over the past year is also leading to profit-taking, as carlos.peyrelongue@bofa.com