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Brazil Banks to Rebound on Economy, Barclays Says

May 24 (Bloomberg) -- Brazil’s economic “improvement” will spur a recovery in financial stocks from the selloff that caused the benchmark Bovespa index to drop 19 percent from an April high, Barclays Plc said.

“Fear and uncertainty may drive the market in the short term,” the analysts wrote. “Some investors will take this opportunity to unwind investments in some asset classes in order to re-allocate their positions, thus participating in a market recovery from an eight-month low.”

Investors should buy companies including Itausa - Investimentos Itau SA, the owner of Latin America’s largest bank by market value, and exchange-operator BM&FBovespa SA, analysts including Roberto Attuch wrote in a note to clients today.

Brazilian banks, which are trading at “more attractive” valuations than their Latin American peers, will see “robust growth and quality earnings,” the analysts wrote.

The Bovespa dropped to 58,192.08 last week, the lowest closing value since September.

To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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