BlackRock portfolio manager Samuel Vecht made the case at the J. Safra Investment Conference in São Paulo in September 2025. Brazil and China are the two largest overweight positions across the emerging-markets portfolios he manages. His core argument is simple: markets do not need to improve sharply for equities to perform well.
The case rests on asymmetry. A small change in borrowing costs could produce a disproportionate market response. That logic makes Brazil one of the more compelling setups in global emerging markets right now.
Why Brazil Is Attracting Attention
Vecht expects some fiscal consolidation in 2027. That could create room for Selic rate cuts, supporting a wider revaluation of Brazilian shares. Foreign and domestic investors have lost confidence after a long period of high interest rates. However, that positioning also leaves valuations exposed to a positive shift in sentiment.
Brazilian banks and retailers are trading at depressed levels, according to Vecht’s assessment. As he framed it directly: Brazil needs only modest improvement to deliver meaningful returns for investors positioned ahead of the shift.
His focus sits on domestic-facing sectors. Beyond the rate story, Brazil also offers commodity exposure, agricultural production and diversified trade links. Those features give global allocators several routes to gain exposure beyond local demand alone.
What Does the View Mean for Global Allocators?
Vecht’s argument extends well beyond Brazil. He described emerging-market equities as trading significantly below historical valuation levels. Dollar-denominated share prices across Latin America and Asia both featured in his remarks.
Meanwhile, the valuation gap with US equities has widened sharply. Vecht believes the premium attached to American assets has become disproportionate after five years of strong performance. A rotation away from that consensus could redirect capital towards emerging markets at scale.
China is the other major overweight in his portfolios. He sees strength across technology, manufacturing and industrial companies, alongside a meaningful valuation discount. Many investors, Vecht noted, have experienced only one dominant market story: US technology outperforming every other region. That consensus is now fragile.
The Domestic Catalyst: Fixed Income to Equities
For Brazil, the immediate catalyst is domestic confidence. Vecht said a stronger re-rating would require money to rotate from fixed income into equities. Some capital held by Brazilian investors in the United States would also need to return. That rotation has not yet begun at scale.
The 2026 election will therefore remain central to positioning. Investors will watch fiscal signals closely. The path of interest rates and evidence of renewed local participation will matter equally. Those indicators should determine whether Brazil’s valuation discount narrows in the quarters ahead.
Quick answers
BlackRock portfolio manager Samuel Vecht argues that deep pessimism is already priced into Brazilian equities. Banks and retailers trade at depressed valuations, meaning even modest policy improvement — such as Selic rate cuts in 2027 — could produce a disproportionate market re-rating.
Vecht identifies two key catalysts: a rotation of domestic capital from fixed income into equities, and the return of Brazilian investor funds held in the United States. Fiscal consolidation that opens the door to Selic cuts would accelerate both flows.
Brazil and China are the two largest overweight positions in the emerging-markets portfolios managed by Samuel Vecht. He sees both markets as trading well below historical valuation levels relative to US equities, which he views as disproportionately expensive after five years of outperformance.
