Brazil Remains Our Top Pick

TS Lombard identifies Brazil as its top equity pick for 2026, anticipating a 38% return driven by an upcoming central bank easing cycle and resilient domestic consumption.

Key Takeaways

• 1.Brazilian equities offer significant upside, with an estimated 38% return for the year driven by monetary easing and resilient growth.
• 2.The Banco Central (BCB) is expected to begin a rate-cutting cycle in March 2026, aiming for a Selic rate of 12% by year-end.
• 3.Brazil's 2026 GDP growth is forecast at 2.0%, outperforming consensus, supported by income tax reforms that will inject BRL30bn into the economy.

Table of Contents

• Macro Strategy - Chart Story
• Brazil is the top pick on our new Global Equity Screener
• Banco Central will finally start easing this quarter
• Despite high rates, we see above-consensus 2026 growth
• Brazil is a high beta market tied to the global cycle
• Positive momentum in EPS revisions
• The income-tax reform will boost consumption
• Lula is still favoured
• Structural reforms that address mandatory spending
• Investing in Brazilian assets in an election year is not for the faint of heart

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