After an 18% drop in the Ibovespa, the stock market multiple drops to 9x and Itaú enters the radar
According to Money Times, economic uncertainty has reopened space for high-quality companies, with Itaú (ITUB4) cited as an option.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM MONEY TIMES · 2 MIN
The Brazilian stock exchange reopened after the holiday with a weight on its shoulders. According to Money Times, the Ibovespa fell 18% in the week before the holiday, the biggest weekly drop since the pandemic, and now the market is trying to define what would be a fair multiple for the national stock market.
The backdrop is the uncertainty about the economic guidelines for the next four years, which weighs on asset prices and investor willingness to take on risk. Also according to the report, the stock exchange's price/earnings multiple, excluding Petrobras and Vale, is 9x, more than one standard deviation below the average.
The author of the text believes that this multiple would only be cheap if it were accompanied by some fiscal adjustment. Without it, in the columnist's view, the balance tends to be even lower. It is a reading that places the fiscal agenda at the center of the discussion about stock market prices.
According to Money Times, uncertainty itself has reopened opportunities. High-quality stocks, which had already gone through previous crises, returned to trading at levels considered attractive.
It is in this scenario that the title of the report points to Itaú (ITUB4) as an option for growth and solidity for a portfolio at this time. The data available for this article does not include bank indicators, so the mention is restricted to the solidity thesis. The author states that he had already been defending shares in solid companies, capable of withstanding challenging cycles, for a few weeks.
What is at stake is the distance between price and fundamental. A low multiple can attract long-term buyers, but, in the author's opinion, without fiscal adjustment the balance tends to be even lower.
What changes for the investor
For those who invest in the stock market, the report's message is one of selectivity: separating solid companies from merely cheap stocks. As long as the uncertainty about economic guidelines does not dissipate, it remains a factor that investors need to monitor closely. This article does not provide a purchase or sale recommendation or price projection, and the decision depends on the profile and horizon of each investor.
Automatically translated from Portuguese.
