J.P. Morgan downgraded Mexican stocks due to economic slowdown and U.S. tariffs while upgrading Brazilian equities, citing potential interest rate cuts and positive impact from China’s stimulus. Mexican GDP is expected to struggle while Brazilian stocks look promising amid favorable conditions for exports.
J.P. Morgan has recently downgraded its stance on Mexican stocks due to concerns over the country’s economic growth and the impact of U.S. tariffs. Conversely, the financial institution adopted a more favorable view on Brazilian equities, attributing this change to the anticipated end of the interest rate hiking cycle and potential support from stimulus measures in China.
The brokerage revised its recommendations, lowering Mexican stocks from “overweight” to “neutral” while raising Brazilian equities from “neutral” to “overweight”. The principal concern regarding Mexico is a significant slowdown in its economic growth, which is likely to hinder Gross Domestic Product (GDP) performance, especially in the first half of the year.
Recent information revealed that Mexico’s economy contracted in the fourth quarter for the first time in more than three years, with the central bank predicting modest growth for the upcoming year. Furthermore, economic experts cite ongoing trade tensions as a significant risk factor affecting the country.
The impact of U.S. tariffs, particularly the new 25% duties on imports from Mexico and Canada, has been notable. Though these tariffs took effect recently, many imports from Mexico and Canada were temporarily exempted, showcasing the complexities of current trade policies.
In contrast, Brazil’s equities are perceived as appealing with the possibility of the country’s central bank nearing the end of its interest rate increases. J.P. Morgan highlighted that the recent indication of further stimulus from China may positively influence Brazilian stock performance, as Brazil stands to gain from increased agricultural export demands, particularly in the context of U.S.-China trade tensions.
In summary, J.P. Morgan’s evaluations indicate a pessimistic outlook for Mexican stocks amid economic challenges and trade issues, while expressing optimism for Brazilian equities propelled by fiscal easing and potential agricultural export opportunities. The contrasting trajectories highlight the complexities of trade relations and economic policies in Latin America.
Original Source: www.tradingview.com
