The bank sees 15%–20% Ibovespa upside by year-end if fiscal policy shifts, with 250,000 points an optimistic 2027 scenario.
Morgan Stanley upgraded Brazilian equities to “buy” and sees the Ibovespa rising 15% to 20% by the end of 2026 if the federal government changes fiscal policy. In its most optimistic scenario, the bank sees the index reaching 250,000 points in 2027.
The analysts tied the outlook to the first round of the general election and a rally on October 5, when the exchange gained more than 7% and closed above 200,000 points for the first time. The intraday high was 209,605.70. CNN Brasil reported first-round shares of 47.03% for Senator Flávio Bolsonaro and 45.16% for President Luiz Inácio Lula da Silva.
The bank’s note said tighter fiscal policy and lower interest rates could reduce the cost of capital and shift some funds from fixed income and cash into equities. Analysts identified energy, minerals, infrastructure and AI hardware as possible investment destinations. This is a conditional scenario, not a guaranteed forecast.
Beyond fiscal policy, Morgan Stanley highlighted currency dynamics, Brazil’s geopolitical position, AI adoption and regulation. Under a more predictable policy environment, financial companies, utilities and industrials could benefit first, while gains may take longer to reach consumer industries.
The bank warned that a sustainable decline in the cost of capital depends on fiscal consolidation and the runoff result. J.P. Morgan also upgraded Brazilian equities from neutral to overweight. These changes reflect the banks’ expectations after the first round, not policy decisions already made.