The impact of the COVID-19 pandemic on the world has caused the economic growth rate of most countries to hit new lows, and the impact has even surpassed that of the 2008 world financial crisis. In order to cushion the heavy economic impact of the epidemic, countries represented by the United States have begun to continuously increase their monetary easing efforts. Since the Federal Reserve announced at the end of August that it would issue a new monetary policy to reach the target of an average inflation rate of 2%, US stocks continued to hold high, the dollar weakened, dollar liquidity shrank, and capital flowed to markets with more room for growth.

Against the backdrop of gradual easing of global liquidity tension, the Federal Reserve will continue to inject more liquidity into the market through quantitative easing policies. This indicates that the US dollar will fall further into a weak position: its competitiveness in the international currency market will decline further. Currently, the outflow of the US dollar, global interest rates, and energy prices all remain low. Judging from historical experience, this is a major benefit for the non-US asset market. It represents the inflow of capital and the revitalization of the market economy, highlighting the value of the non-US emerging markets represented by China, Russia, and Brazil.

The Brazilian economy has gone backwards for ten years, yet the stock market has the broadest prospects of appreciation

Affected by the COVID-19 pandemic, Brazil's GDP fell 9.7% month-on-month after seasonal adjustment in the second quarter of this year. On November 25, 2020, the Brazilian Ministry of Economy predicted that Brazil's GDP forecast for 2020 would be raised to -4.5% from -4.98% in October. Financial markets predict that the Brazilian economy will not return to the level before the pandemic until 2022, yet the Brazilian economy has now fallen back to the level at the end of 2009.

Everything has two sides. In the face of the reality of the economy being hit hard, it reflects the room for recovery and the market's sensitivity to the economic rebound. Economies with better economic resilience may not rebound as strongly, but compared to emerging markets that are growing rapidly, this means more room for recovery and demand for higher returns.

From a policy perspective, the Central Bank of Brazil has mitigated the heavy impact of the epidemic on the economy and continues to maintain an easing trend. Since June of this year, the Central Bank of Brazil has lowered the benchmark interest rate from 3% to 2%, the lowest level since adopting the inflation target in 1999. Although the loose monetary policy led to a weakening of the exchange rate, it also stimulated the rise of the stock market. This reflects the strong sensitivity and strong dependence of the capital market on easing policies. Under the premise that Brazil gradually unblocks cities and employment demand grows further, this round of easing policies will continue. This provides prospects for the “rejuvenation” of the Brazilian stock market.

The Faba Brazil Equity Fund, a witness to economic recovery

In the ten years from 2000 to 2013, compared to developed markets, the economic growth rate of emerging markets was 4.2 times higher, while the return on equity was 40% higher (source: Two Sigma). However, in recent years, with the diversification of capital invested in emerging markets and the increase in the degree of global integration of industries, the return on investing in portfolio financial assets in multiple regions of the emerging markets seems to have declined over time, making products that are relatively concentrated in the regions more differentiated.

The Faba Brazil Equity Fund is an equity fund that mainly invests in Brazil. As of the end of September 2020, the Fund's top five holdings were the Brazilian Stock Exchange, Brazil's Vale Vale, magazine Luiza, and Bradesco Bank Preferred Shares and Depositary Receipts, with the top ten holdings accounting for 40.86%.

In terms of industry distribution, the fund's top holdings are mainly in finance, materials, non-essential consumer goods and essential consumer goods, energy, etc., and are arranged in various basic sectors strongly linked to the country's economic recovery.

Represented by the financial industry, which accounts for 26.06% of holdings, Brazil is currently in the initial stage of recovery. It will take a long time for local companies to repair their balance sheets and cash flow cycles. Coupled with falling residents' incomes, which also limits the expansion of consumption, this has further expanded the government's fiscal pressure. Under such an environment, the country, enterprises, and residents' demand for the financial industry, financing loans, and financial services will further increase, and the financial industry will enter a rapid development cycle in the pandemic era.

Also, as Brazil further opens up cities, the increase in residents' demand for terminal consumption will also drive the recovery of the consumption and materials sectors, and the increase in liquidity will also feed back the vitality of the financial market. For investors, it is a good time to lay out related sectors, and the BNP Paribas Brazil Equity Fund provides such an opportunity.

The yield of the Faba Brazil Equity Fund has been rising steadily since its establishment. As of October 30, 2020, the fund's yield over the past five years was 26.74%. In the context of the 2020 pandemic, the Brazilian economy was hit hard, and the securities market was inevitably implicated. The year-to-date yield of the Faba Brazil Equity Fund still outperformed the benchmark benchmark of -41.42%, at -39.3%. Previously, the fund's yield in 2019 reached 26.13%.

Experts in global asset management: Paris, FranceAsset management

A good fund needs a team with a global perspective, risk management ability, and asset management ability. BNP Paribas Asset Management is unquestionably the strongest endorsement of its fund products.

Established in 1968, BNP Paribas Asset Management is an investment management business under BNP Paribas, a major international financial institution. It ranks among the top 30 fund companies in the world, providing leading and high-quality investment solutions for individuals, enterprises and institutional investors.

. As a global investment institution with operations in more than 36 countries, Paris Asset Management can always make more forward-looking and insightful investment choices with global investment experience and extensive business capabilities, so that clients with different needs can achieve the best balance in terms of profitability, investment, and risk.

The more than 3,000 employees of Asset Management in Paris, France include more than 520 investment professionals. Among them, Gilberto Nagai, the manager of the Faba Brazil Equity Fund, is a Latin American stock executive with 22 years of experience in the industry. He began his career as a seller analyst for ABN Amro Securities in 1998, then worked for the CESP Foundation and ABN Amro Asset Management, then formed the Brazilian team of Fortis Asset Management, and joined the Franco-Brazilian Asset Management team as a whole in emerging markets and the Brazilian market With deep and unique understanding, we are committed to bringing customers more long-term capital value-added value.