Economics & Strategy – Equity Strategy: Second

Itaú BBA’s Carlos Constantini advances from third place to second. The São Paulo–based strategist is urging clients to underweight Brazilian equities — with a few noteworthy exceptions — on concerns about political instability ahead of next year’s congressional and presidential elections as well as slowing economic growth. (In July the nation’s Ministry of Finance slashed its 2013 real gross domestic product growth forecast from 3.5 percent to 3 percent.) Constantini adds that global investors could pull out of Latin American and other emerging markets once the U.S. Federal Reserve begins to curtail its quantitative easing strategy, which could happen by the end of this year. “If capital flows are leaving the country, this could translate into negative performance for prices of most asset classes,” he says. The few names Constantini is recommending include Brasília’s BB Seguridade Participações, the insurance unit of state-owned Banco do Brasil; São Paulo–based fuel distributor Ultrapar Participações; and Vale, a diversified metals and mining outfit headquartered in Rio de Janeiro — all of which are well positioned to weather any macroeconomic storms, he believes. — Carolyn Koo