Brazil investors chase global assets as overseas rates rise, local market stays cheap

High interest rates in major economies such as the United States have lifted yields, prompting Brazilian investors to look abroad for diversification. Arley Matos, head of Advisory at Santander, notes that central banks' caution on inflation keeps rates elevated, making foreign fixed‑income, sovereign bonds, quality credit, technology‑focused equities, gold and the dollar appealing for portfolio allocation, while warning of concentration risk and the need to match assets to investor profiles.

At the same time, Brazil’s equity market trades at a historically low valuation—about 8.1 times forward earnings for 2026—well below peers like South Korea (9.2), China (10.6) and the U.S. S&P 500 (21.2). Franklin Templeton’s Frederico Sampaio says, "When I look at our market valuation, it reflects a lack of expectations," attributing the discount to low growth expectations, productivity concerns and macro‑uncertainty, including high rates and fiscal doubts. After a strong inflow early in the year, foreign investors have withdrawn roughly US$35 billion since mid‑April.