Some Foreign Capital Returns to São Paulo’s B3 After Months of Outflows

In July 2024, foreign investors returned to the Brazilian stock market, marking the first time this year they became net buyers.

By July 29, foreign investments in Brazilian equities totaled R$3.6 billion ($623.4 million).

However, the year-to-date figure remains deeply negative, with net sales by foreign investors amounting to R$36.5 billion ($6.321 billion).

July’s Market Performance

July was a standout month for the B3, with the Ibovespa index rising 3.02%, its best performance of the year.

Despite this, the index still shows a negative movement of 4.9% for the year.

According to BTG Pactual, a large investment bank, the R$3.6 billion ($623.4 million) inflow is positive.

However, it is far from the R$20 billion ($3.463 billion) monthly inflows seen in November and December of last year.

Factors Driving the Market

Several factors contributed to the positive performance in July. The decline in U.S. Treasury yields and the anticipated interest rate cuts by the Federal Reserve played significant roles.

By the end of July, U.S. 10-year Treasury yields had fallen to 4.1%, down from 4.3% in June and 4.7% in April.

Market confidence grew as expectations solidified around a 25 basis point rate cut in September, followed by another in December.

Despite the positive inflows, Brazil faces ongoing monetary and fiscal challenges. The Brazilian government’s R$15 billion ($2.597 billion) budget cut helped, but more cuts are necessary to restore market confidence.

Nevertheless, the favorable conditions from the U.S. are likely to continue supporting the Brazilian stock market.

Some Foreign Capital Returns to São Paulo’s B3 After Months of Outflows