By Gabriel Burin

BUENOS AIRE (Reuters) – Brazil’s stock market is expected to recover in 2022 after a steep fall this year. Investors are looking for bargains, but they must also be aware of the uncertain political environment in Brazil, according to Reuters.

Stock indexes are down 13.7% year to date, heading towards the worst annual drop since 2013. That was 2013, when Brazil was entering a severe domestic crisis. Bovespa trading close to its lowest level for 12 months at 102.741 points.

After President Jair Bolsonaro made a concession to austerity, the local markets are now facing a new wave of financial worries.

Brazilian assets are being affected by the Omicron variation of COVID-19, which could lead to a new pandemic. There are also growing concerns about higher interest rates in America.

Based on the average estimate of 12 equity analysts polled November 16-30, the Bovespa’s stock exchange value in Sao Paulo should rise 17.3% to 120,500 next year.

Joao Guilherme Puenteado CEO Apollo Investimentos stated that “the degree of uncertainty is such in Brazil that national assets have fallen to historically low levels when price/earnings rates are considered”

He said that if the uncertainties decrease, there could be a positive bias in favor of Brazilian assets. However, the 2022 elections could prove to be one of the most challenging for Brazil’s last 30 years.

Former President Luiz Inacio Lula da Silva leads opinion polls and last week met French President Emmanuel Macron, sparking an angry reaction from Bolsonaro https://www.reuters.com/markets/rates-bonds/bolsonaro-denounces-macron-lula-meeting-provocation-2021-11-25. Both have not officially announced their candidacy to the Oct. 2022 election.

Lula is trying to exploit Bolsonaro’s isolation diplomatically through the encounter with Macron. Brazil’s Supreme Court reversed Lula’s 2018 conviction for taking bribes at engineering firms.

The Bovespa has been affected by growing doubts regarding Brazil’s political system. In August, the survey’s median estimate at 114,000 points in mid-2022 was much lower than 130,000.

Brazilian stocks have seen a drop in value due to worries about the economy. According to a separate Reuters poll, high inflation and slow growth will continue next year.

Meanwhile, Mexico’s S&P/BMV IPC stock index is up 11.6% so far in 2021, on track for its biggest annual gain since 2012. The index stood at 49.171 points on Tuesday, and investors anticipate further increases next year.

Mexico’s IPC would reach 56 250 points by the end 2022. That’s 14.4% above where it stood on this week.

(Other stories taken from the Reuters global Stock Markets poll package:

(Also, additional polling was done in Mexico City by Miguel Angel Gutierrez and Andre Romani from Sao Paulo by Tushar Goenka; further reporting by Tushar in Bengaluru by David Gregorio. Editing by David Gregorio.