* For poll data see
* Brazil's Bovespa forecast at 52,000 at end-2014
* World Cup, Brazil elections on the horizon
* Mexico IPC to reach 44,750 by end-December
By Asher Levine and Jean Arce
SAO PAULO/MEXICO CITY, March 20 After performing
miserably over the past year, Brazil's Bovespa index
should move higher alongside a global economic recovery, a
Reuters poll showed on Thursday, while Mexican shares will
likely recover as market reforms take effect.
Brazilian stocks have fallen nearly 20 percent over the past
12 months, underperforming nearly every major stock index in the
world. Investor concerns over higher interest rates, stubbornly
elevated inflation, weakening government finances and a
potential energy crisis helped spur the drop in local shares.
That decline was amplified earlier this year by a global
sell-off in emerging-market assets, sparked by political
turbulence in Turkey and Ukraine and the winding down of
monetary stimulus in the United States.
Analysts in the Reuters poll conducted over the past week do
not see the index falling from the 8-month lows reached this
They predicted the Bovespa would advance about 3 percent
from Wednesday's close to hit 48,000 points by mid-2014 and rise
to 52,000 points by year-end.
That would put the index at just a 1 percent gain for 2014
and the median is far short of the 59,000 prediction in a
"The improvement won't come from the Brazilian economy,
which is going to remain weak, but rather because the market
losses have been over-extended and the global outlook is one of
recovery," said Alvaro Bandeira, a partner with Orama
Investimentos in Rio de Janeiro.
Bandeira highlighted sectors that have seen their share
prices suffer the most in recent months as the most likely
candidates to see a rebound.
Those include steelmakers such as Gerdau SA and
Usinas Siderurgicas de Minas Gerais SA, whose shares
are down about 23 percent and 37 percent respectively this year
Other analysts suggested the best opportunities were in
companies targeted towards Brazil's still-growing middle class,
such as education firm Kroton Educacional SA and
insurance holding company BB Seguridade Participacoes SA
Most of the 16 analysts polled said Brazilian stocks were at
attractive valuations compared to developed markets, though few
were confident in a strong recovery, citing a number of risks
looming on the horizon.
RISKS AND REFORMS
Chief among them is Brazil's presidential election,
scheduled to take place in October. Some analysts expressed
concern that a tight race could lead to additional government
intervention in the private sector in order to boost short-term
Polls show President Dilma Rousseff winning handily but her
odds may change closer to the vote.
Other key risks include a sharp slowdown in top trade
partner China, a potential credit downgrade, and productivity
losses expected during the soccer World Cup, which Brazil will
host in June.
"During the World Cup the country will be basically stopped.
Then we have elections right after," said Ariovaldo Santos, a
trader with H.Commcor in Sao Paulo. "The fears of a downgrade,
the risk of protests are still very much alive."
Mexico's IPC index, which has fallen around 10
percent over the past 12 months, should rise to 44,750 points by
year-end, the poll showed, a 5 percent rise from 2013's closing
Mexican stocks have been on a downward trajectory since the
start of the year, like Brazil a victim of recent
Still, local analysts were hopeful that major
telecommunications, banking and energy reforms pushed through
Congress last year will eventually contribute to greater foreign
investment and economic growth.
Secondary laws will hash out the fine print of reforms
approved last year that open up the energy sector to private
exploration and aim to boost competition in the telecoms sector,
dominated by a few large players.
Analysts also said an upgrade in Mexico's sovereign credit
rating by Standard and Poor's in December has lowered Mexico's
risk profile among investors, which could help boost shares.
(For other stories from the poll see )
(Additional reporting by Silvio Cascione in Brasilia, Priscila
Jordao in Sao Paulo and Noe Torres in Mexico City; Editing by