Retail Savings and Investments in Brazil - Coronavirus (COVID-19) Sector Impact

Summary

The Coronavirus (SARS-CoV-2) outbreak, dubbed COVID-19, is first and foremost a human tragedy, affecting millions of people globally. The contagious Coronavirus, which broke out at the close of 2019, has led to a medical emergency across the world, with the World Health Organization officially declaring the novel Coronavirus a pandemic on March 11, 2020.

Fears surrounding the impact of COVID-19 have already significantly impacted the global economy, with most countries across the world registering declines in economic growth for the year to date. Many economists and institutions have cut their forecasts, with many experts predicting the onset of recessionary environments.

A similar trend has been seen in Brazil, with economic growth declining in Q1 2020. The International Monetary Fund (IMF) anticipates a 5.3% decline in Brazil’s GDP in 2020, while unemployment is set to rise to 14.7%. This will impact the country’s retail savings and investments industry. Brazil has been among the countries worst hit by the pandemic, with the second-highest number of confirmed cases (behind only the US).

This report focuses on the impact of the coronavirus outbreak on the Brazilian economy and the country’s retail savings and investment market. It also highlights the measures adopted by the government to combat COVID-19. Based on our proprietary datasets, the snap shot contrasts the publisher's pre-COVID-19 forecasts and revised forecasts of total retail bond, deposits, equities and mutual funds holdings in terms of value and growth rates. It also analyses the effects on HNW wealth, examining the importance of different industries as a contributor to HNW wealth.

Scope

• Brazil’s retail savings and investments are forecast to expand by just 0.5% over the course of 2020, as the economy has come to a near-standstill thanks to the impacts of COVID-19. Even though the easing of lockdown restrictions and restarting of economic activities has gradually improved stock market performance, elevated levels of uncertainties regarding market performance still persist as the number of cases continues to rise. Retail equity and mutual fund holdings are thus expected to take the brunt of the economy’s slowdown, with respective declines of 23.2% and 8.6% anticipated.
• Retail deposits and bond holdings have fared better than initially expected courtesy of a flight to safety away from risk assets. According to the Central Bank of Brazil, both time deposits and demand deposits observed boosts in their balances by 6% and 4%, respectively, in May 2020. However, more pronounced declines in risk asset holdings mean the publisher's total retail savings and investments holdings forecast for 2020 is 4.7 percentage points (pp) lower than before the onset of COVID-19.
• High-net-worth (HNW) wealth is forecast to grow by only 0.8% during 2020. However, the effects on the different segments that make up the HNW market will be disproportionate. The financial services sector - the largest contributor to HNW wealth - has already taken a significant hit, as indicated by the 27.1% decrease of the BM&FBOVESPA Financials Index for the year to June 30, 2020.
• The industries that have withstood the current crisis more robustly, such as the tech and healthcare sectors, only contribute a minor share to HNW wealth.

Reasons to Buy

• Make strategic decisions using top-level revised forecast data on the Brazilian retail savings and investments industry.
• Understand the key market trends, challenges, and opportunities in the Brazilian retail savings and investments industry.
• Receive a comprehensive insight into the retail liquid asset holdings in Brazil, including deposits, mutual funds, equities, and bonds.