Portfolio Manager Insights

Winds of change in Brazil

Fidelity’s Greg Lee believes Brazilian stocks appear poised for a resurgence following years of turbulence marked by political instability and economic uncertainty.

By: Gregory Lee
Updated: 7/6/2026
  • Equities in Brazil may be stepping into a promising new chapter, fueled by political shifts, monetary policy changes and the resilience of high-quality businesses, says Fidelity Portfolio Manager Greg Lee, who believes the nation’s presidential election in October could be a game-changer for both its economy and stock market.
  • “Historically, political uncertainty has weighed heavily on investor sentiment, but the possibility of a leadership change and greater fiscal discipline could be catalysts for better days ahead,” according to Lee, who manages Fidelity Advisor® Emerging Markets Discovery Fund.
  • In helming the global emerging-markets equity strategy, Lee emphasizes high-quality businesses based in emerging markets that he considers undervalued and exposed to secular trends of ascendant economies.
  • Brazil’s equity market, he says, stands out for its concentration of quality companies trading at attractive valuations. Lee first identified this opportunity in early 2023, after a two-year cycle of rate hikes left the country with the highest real interest rates among major global economies.
  • Lee notes that this led him to an outsized allocation to Brazil relative to the fund’s benchmark, which began to bear fruit as the central bank started cutting interest rates in late 2023.
  • “That being said, investing in this nation is not for the faint of heart,” he adds. “For example, when inflation ticked up slightly in 2024, longer-term expectations rose more substantially, stemming in part from a deterioration in fiscal prudence under populist President Lula.”
  • While Lee sees compelling short-term value in Brazilian stocks, their longer-term potential will depend largely on investors regaining confidence in the fiscal outlook, allowing real rates to decline.
  • Against this backdrop and given his optimism about Brazil’s equity market, the country remains among the fund’s more prominent overweights, as of May 31, 2026, with stakes in Hypera, Brazil’s largest pharmaceutical company, as well as energy firms Prio and Vibra Energia, and industrials holding Orizon Valorização de Resíduos.
  • “There’s no question that Brazil is at a crossroads, and the next few years could be pivotal,” Lee concludes. “But by taking a long-term perspective and investing in undervalued, high-quality businesses today, I’m optimistic about their ability to deliver strong returns as the economic environment stabilizes.”
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