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The 2014 All-Brazil Research Team: Equity Strategy, No. 3: Felipe Hirai
Total appearances: 2
Team debut: 2013
Advancing to third place from runner-up, where he debuted on this lineup last year, isFelipe Hiraiof Bank of America Merrill Lynch. He characterizes the outlook for Brazilian equities as “uncertain,” partly owing to the performance discrepancy between the stock market and the domestic economy. “Local fundamentals keep deteriorating, including the declining levels of job creation, low confidence levels, rising inflation rates and poor fiscal results,” asserts São Paulo–based Hirai. “The disconnect between this and the buoyant equity market is unsustainable in the longer term, in our view.” Also of concern are U.S. interest rates, which could rise faster than expected, he warns, and results of Brazil’s October presidential elections, which could have an impact on sentiment as well as state-owned and politically sensitive companies such as Rio de Janeiro–based energy giant Petróleo Brasileiro, better known as Petrobras. Hirai recommends that investors “remain relatively cautious and focus on quality.” One sector he favors is education, thanks to its growth outlook, consolidation and continued government support with regard to student loans. He also favors private banks, believing that widening spreads should help offset higher delinquencies.