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The 2014 All-Brazil Research Team: Equity Strategy, No. 1: Guilherme Paiva

Guilherme Paiva Morgan Stanley First-place appearances: 4

Total appearances: 5

Team debut: 2010

For a fourth year in a row, Guilherme Paiva tops this roster. “He is one step ahead of his competitors,” one money manager says of the New York–based Morgan Stanley strategist. Brazil will continue to face challenges, struggling in the second half of this year into next year, Paiva believes. “From a cyclical point of view, the macro imbalances of the Brazilian economy have been growing over the past three years, and we believe the country will have to pay a price in terms of lower growth over the next 12 months,” explains Paiva, 39. “Therefore, investors should monitor carefully labor market trends to see if the tight labor market finally starts to unravel, and the potential impact that higher unemployment could have on consumption and nonperforming loans.” In this environment, he favors domestic defensive sectors with strong cash flow generation, such as food, fuel distribution and information technology. In addition, should the real’s exchange rate depreciate postelection, as expected, clients would do well to put their money in exporting sectors that are leveraged to developed markets, such as aerospace and, to a lesser degree, soft-commodities like pulp, Paiva advises.

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