{"id":98612,"date":"2026-05-22T21:29:01","date_gmt":"2026-05-23T00:29:01","guid":{"rendered":"https:\/\/murray.adv.br\/?p=98612"},"modified":"2026-05-22T21:29:01","modified_gmt":"2026-05-23T00:29:01","slug":"foreign-investors-cut-brazil-exposure-cooling-stock-rally","status":"publish","type":"post","link":"https:\/\/murray.adv.br\/en\/foreign-investors-cut-brazil-exposure-cooling-stock-rally\/","title":{"rendered":"Foreign investors cut Brazil exposure, cooling stock rally"},"content":{"rendered":"
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Outflows from Brazilian stocks reach R$11.4bn in May as oil, global rates and tech rotation reshape risk appetite<\/em><\/strong><\/h6>\n<\/div>\n<\/div>\n
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Over the past 30 days, non-resident investors have put money into Brazil\u2019s stock exchange in only two sessions, and the amounts were almost symbolic. In May alone, withdrawals total R$11.4 billion<\/strong>, in a possible sign that the rally in Brazilian stocks has come to an end.<\/p>\n<\/div>\n

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The shift in foreign investors\u2019 mood had already been flagged by Intraday at the start of the week, but it has intensified since then. It is no coincidence that the benchmark Ibovespa stock index has moved away from its record level of 199,000 points and fell below 180,000 points on Thursday (21).<\/p>\n<\/div>\n

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From the start of the year through the peak reached on April 14, Brazil\u2019s equity market saw inflows of\u00a0R$69 billion<\/strong>\u00a0from foreign investors, according to B3 data. That was almost three times the amount that entered the market in all of 2025, when inflows totaled\u00a0R$25.4 billion<\/strong>.<\/p>\n<\/div>\n

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Since April 15, however, investors have withdrawn\u00a0R$23.9 billion<\/strong>, a little more than one-third of the volume that had entered the stock market in 2026. During that period, there were inflows in only two sessions: April 20, when\u00a0R$32 million<\/strong>\u00a0entered the market, and May 8, when net inflows totaled\u00a0R$118.8 million.<\/strong><\/p>\n<\/div>\n

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\u201cThe mood has turned more negative,\u201d Bank of America strategists\u00a0David Beker<\/strong>\u00a0and\u00a0Paula Andrea Soto<\/strong>\u00a0said after a round of meetings with investors in London and Paris in recent days.<\/p>\n<\/div>\n

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\u201cConcerns about the external backdrop, combined with recent political developments in the region, are prompting investors to take a more cautious stance. A few weeks ago, clients were waiting for the war to end before increasing exposure to Latin America. Now, the main question is whether exposure to the region will need to be reduced further,\u201d said the BofA team in a note to clients.<\/p>\n<\/div>\n

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War and oil reshape the outlook<\/strong><\/p>\n<\/div>\n

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In mid-April, foreign investors were extremely optimistic about Brazil, as Intraday reported several times, especially during the spring meetings of the International Monetary Fund.<\/p>\n<\/div>\n

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The country was seen as a relative beneficiary of the war<\/a>\u00a0backdrop because it is a net oil exporter, is rich in natural resources and is geographically distant from the conflict. In addition, with the highest real interest rates in the world, the approaching cycle of Selic base-rate cuts was seen as another attraction for domestic stocks.<\/p>\n<\/div>\n

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Since then, however, the market mood has changed decisively. The absence of a quick resolution to the war in the Persian Gulf has imposed a high floor for oil prices, which have struggled to trade below $100 on a sustained basis.<\/p>\n<\/div>\n

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As a result, the impact on inflation is being felt around the world. Fearing second-round effects, many developed markets are already starting to price in interest-rate hikes by central banks, while the rotation into technology stocks does not favor Brazil.<\/p>\n<\/div>\n

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\u201cAlthough there is still no clarity on how long the war will last, clients believe the damage has already been done,\u201d the BofA strategists said. \u201cThe investors we met highlighted concern about higher global rates and their potential impact on currencies and flows to Latin America,\u201d Beker and Soto said.<\/p>\n<\/div>\n

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They also noted that there is additional pressure on central banks in the region and that, even if Brazil\u2019s monetary easing continues, \u201cthe magnitude of the cuts is unlikely to provide meaningful relief to the corporate sector.\u201d<\/p>\n<\/div>\n

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In addition, quarterly earnings from technology and artificial-intelligence-related companies were exponential and historically exceptional, contributing to the reversal of the flows seen at the start of the year. That comes on top of the approaching elections and recent local political developments, which have increased investors\u2019 perception of risk and brought a new wave of volatility to local markets.<\/p>\n<\/div>\n

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Brazil rally comes under threat<\/strong><\/p>\n<\/div>\n

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Against the new global market backdrop, discussions are growing over whether the rally in Brazilian stocks still has enough strength to continue. According to\u00a0Andre Suaid,<\/strong>\u00a0head of Latin America equities at Marex, \u201cthe party seems to be going on pause.\u201d<\/p>\n<\/div>\n

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\u201cThe rally in technology and artificial-intelligence-related stocks continued to accelerate, further concentrating global capital flows in U.S. equities. Expectations of persistent inflationary pressures and higher-for-longer interest rates also weighed broadly on emerging markets, tightening financial conditions and limiting investors\u2019 appetite for risk outside the U.S. The rally in Brazil\u2019s stock market is, in fact, at risk,\u201d he said.<\/p>\n<\/div>\n

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Ricardo Maluf,<\/strong>\u00a0head of the equity trading desk at Warren Investimentos, said an important part of the flow that went into Latin American stock markets this year had a more tactical component. It was supported by diversification away from the dollar, concerns over artificial-intelligence capex, election-related trades and a defensive move tied to the geopolitical backdrop, \u201cnot least because our market has a heavy weighting in banks and commodities and works relatively as a \u2018safe haven\u2019 in this environment.\u201d<\/p>\n<\/div>\n

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In Maluf\u2019s view, the reversal of that movement comes as geopolitical conflicts lose some marginal intensity and investors refocus on global fundamentals, especially earnings expectations linked to technology companies, which have returned to their radar. \u201cThat ends up attracting flows back to the U.S. and Asia,\u201d he said.<\/p>\n<\/div>\n

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External factors<\/strong><\/p>\n<\/div>\n

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According to J.P. Morgan\u2019s equities team, led by\u00a0Emy Shayo Cherman<\/strong>, Brazil\u2019s recent political events do not offer an entry opportunity, even though EWZ, the main Brazilian equity exchange-traded fund on Wall Street, is down 4% since the start of the war after having risen 8% even during the conflict.<\/p>\n<\/div>\n

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\u201cThe main reasons behind the decline in Brazilian markets are more external than internal. We believe investors would need the reopening of the Strait of Hormuz, lower oil prices and a decline in Treasury yields to start buying again. For foreign investors, downside risk is greater, considering that the real seems asymmetrical toward appreciation,\u201d\u00a0Emy Shayo Cherman<\/strong>\u00a0and\u00a0Cinthya Mizuguchi\u00a0<\/strong>said.<\/p>\n<\/div>\n

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J.P. Morgan\u2019s team monitored episodes in recent years when outflows from Brazil exceeded R$10 billion in a 15-day rolling window. \u201cWe found 12 episodes of withdrawals of this magnitude or larger, two of which occurred at the start of the pandemic.<\/p>\n<\/div>\n

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\u201cThe outflows during Covid were the longest-lasting and posted the largest withdrawal volumes. All other episodes were much shorter, with a duration similar to the current one. So, if history is any guide, the outflow may be nearing an end.\u201d<\/p>\n<\/div>\n

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The executives cautioned, however, that other episodes had not occurred immediately after capital inflows as large as this year\u2019s. \u201cConsidering the extraordinary flow observed through April 15, the volume of withdrawals may also end up being larger than the historical pattern.\u201d<\/p>\n

* By\u00a0Gabriel Roca,\u00a0Bruna Furlani\u00a0and\u00a0Maria Fernanda Salinet, Valor\u00a0\u2014 S\u00e3o Paulo<\/p>\n

Source:Valor International<\/p>\n

https:\/\/valorinternational.globo.com\/<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/article>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Outflows from Brazilian stocks reach R$11.4bn in May as oil, global rates and tech rotation reshape risk appetite     05\/22\/2026\u00a0 Over the past 30 days, non-resident investors have put money into Brazil\u2019s stock exchange in only two sessions, and the amounts were almost symbolic. In May alone, withdrawals total R$11.4 billion, in a possible […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8106],"tags":[26936,26935],"class_list":["post-98612","post","type-post","status-publish","format-standard","hentry","category-murray-news","tag-cooling-stock-rally","tag-foreign-investors-cut-brazil-exposure"],"yoast_head":"\nForeign investors cut Brazil exposure, cooling stock rally - Murray Advogados<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/murray.adv.br\/en\/foreign-investors-cut-brazil-exposure-cooling-stock-rally\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Foreign investors cut Brazil exposure, cooling stock rally - Murray Advogados\" \/>\n<meta property=\"og:description\" content=\"Outflows from Brazilian stocks reach R$11.4bn in May as oil, global rates and tech rotation reshape risk appetite     05\/22\/2026\u00a0 Over the past 30 days, non-resident investors have put money into Brazil\u2019s stock exchange in only two sessions, and the amounts were almost symbolic. 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