Samba in the wallet

João Sousa Cara (Caro João Sousa), the head of the Fund BPI Brasil Valor, turned saving 300 investors in one of the most profitable enterprises of 2016. He was overtaken only three managers of Russian stocks, which got 78% percent of the profits.

Things in Russia aren’t going well: the economy is still recovering from low oil prices and international sanctions imposed as a result of military invasion of the Ukraine. The position of Brazil is also poor: political instability affects the economy of the country. How then to explain the fact that Russia and Brazil were the largest sources of income for Portuguese investors?

Cara Joao Souza, managing assets of the Bank BPI (Portuguese investment Bank), which conducts the Affairs of BPI Brasil Valor, boasts the most outstanding achievements in the domestic stock market in 2016. The Fund brought 73,62% of the profits, the highest income among the Portuguese. Ahead of him were only the four classes of the same Fund Russian equities Pictet Russian Equities managed by Klaus Bockstaller (Klaus Bockstaller), Hugo Bain (Bain Hugo) and Christopher Bannon (Christopher Bannon).

Brazil is better than we thought

Brazil is experiencing an economic crisis — production is not growing, unemployment, inflation knows no boundaries — political crisis, which led to the resignation of President Dilma Rousseff — and the financial crisis there was a reduction of loans and events of default have increased. However, according to joão Sousa punishment, pessimism went too far: Brazil preserves its potential. “This negative Outlook for the country was an interesting opportunity for investment,” he explains.

“Over the years, political instability has declined, which allowed investors to feel more confident — says asset Manager BPI. — The expansion of the global economy and stimulus policies pursued by the Chinese government,” also contributed to the positive dynamics in the Brazilian securities market, helping the growth of commodity prices and shares of producers, such as Petrobras and Vale, which mainly relies BPI Brasil Valor. Cara Joao Sousa also said “the fight against corruption, including investigations against major political figures as encouraging for the country signal.”

Get ahead of the competition BPI Brasil Valor allowed the process of stock selection. “We conducted the investment policy on the principle of bottom-up, that is, we orientirueshsya at the core of each company, taking into account the quality of the business model, its competitive advantages, financial results, quality control, and experience of the company,” says Kara, joão Sousa, who during the 2017 plans to visit Brazil at least twice.

In addition, according to Cara Joao Souza, in Brazil, there are a number of untapped opportunities. “We believe that if the prices of some Brazilian assets, the investor has the opportunity to earn income on the condition that he will conduct a serious, consistent, active and long-term investment policy,” he says. The Brazilian real, which largely contributed to the profits of the investors BPI Brasil Valor, according to the Manager, possibly, will continue to strengthen its position.

The main risk of investing in Brazil is political. “The evolution of world politics will have a significant impact on the performance of shareholders throughout the world, especially in countries whose economy is heavily dependent on foreign markets, such as Brazil”, says joão Sousa punishment.

Domestic policies are also important. “Investors will be particularly closely monitor the financial reforms promised by the new government (…) they are essential in order to be able to control the increase in public debt and promote economic growth, — said the managing. — Another factor is the policy of the fed raising interest rates [USA], which must entail a transfer of capital from developing markets in the United States, resulting in the growth of the dollar and the depreciation of the currencies of developing countries,” he concludes.

Fund BPI Brasil Valor, which at the end of June 2016 consisted of 313 investors, the most popular BPI Fund, which invests in Brazil. BPI Brasil, which in the same period had 4789 participants, in 2016 became the second most profitable of the Portuguese Foundation for 57,21%. This income combines Brazilian stocks and bonds. Both funds advance on the market Bank, Best, Bank, BPI, Banco de Investimento Global and Bank Invest. In addition, BPI Brasil also extends through the ActivoBank.

Russia may be more profitable

“Low ratings, the economy is in the recovery phase, a significant decrease in interest rates along with the improvement of the geopolitical situation”, which specifies one of the leading experts Pictet Russian Equities Hugo Bain, explaining the progress on the Moscow stock exchange in 2016. “Achieving [our] Fund exceeded expectations through proper selection of the shares,” according to Bain Observador. Four classes Pictet Russian Equities — which in Portugal is subject to ActivoBank, a Bank, Best, Bank, BIC, Global Investment Bank and Bank Invest — given the average 77,08% of revenue, 12 percentage points more than the MICEX.

As in the case of BPI Brasil Valor, achievements Pictet Russian Equities to a large extent contributed to the fluctuations in exchange rates. “I hope that the ruble will continue to strengthen,” says Hugo Bain. The Manager believes that 2017 will be another positive year for Russian stocks. “If the price of oil will remain above $ 50 [USD] or increase, we can hope for another profitable year, while the market will follow a cyclical decline in the activity of the Central Bank and economic recovery”, says Bain.

Oil, the main exports of the Russian economy, is the biggest risk. If the price stays below $ 40 per barrel, “it is hardly possible to expect positive dynamics in the market”, says Hugo Bain. In the first week of 2017 a barrel of oil is trading at about 53 dollars (51 euros).

Hugo Bain and his colleagues Klaus Bockstaller and Christopher Bannon continue to rely on the oil sector. Approximately 28% of the portfolio Pictet Russian Equities are invested in the energy sector, in companies such as “Gazprom”, “LUKOIL” and “NOVATEK”. With oil prices of 50 dollars “Russian oil companies are the most profitable in the world and also pay significant dividends, explains Bain. They are traded at a significant discount compared to the world’s largest oil companies.”

Although the Fund’s team optimistically assesses the state of the Moscow stock exchange in 2017, Pictet Russian Equities is not suitable for every investor. As BPI Brasil Valor is one of the most volatile funds, which try to benefit in Portugal. 80 percent drop, which Pictet Russian Equities have registered just six months in 2008 that few survive.