POLL-Brazil stocks rebound to continue, outlook dented after recent fall

By Gabriel Burin and Noe Torres

BUENOS AIRES/MEXICO CITY, Feb 26 (Reuters) - Brazil's stocks will likely continue to rebound from last year's fall but the confidence crisis that caused it took some shine off the potential upside, a Reuters poll found.

Sao Paulo's Bovespa index - or Ibovespa .BVSP - has gained 5.9% from a near-14-month low on January 3 as investors sprang into beaten domestic equities following the latest turbulence.

However, the consensus estimate for the benchmark at the end of 2025 was reduced from a November poll. That suggests persisting worries about the country's economic policies that helped trigger a near-9% fall between mid-December and the first days of January.

The Bovespa is set to rise to trade at 138,000 points at year-end, up 10% from 125,401.4 points on Monday, according to the median estimate of 13 stock market strategists polled February 13-25.

In November's survey, the Bovespa had been forecast to end 2025 at 145,000 points, or 5% above this month's poll median view.

"While higher Brazilian interest rates and inflation, as well as the political situation, raise concerns, shares underwent a strong correction in December," said Regis Chinchila, an analyst at Terra Investimentos.

"Stock multiple ratios have been excessively discounted and that is why we believe in a recovery even in the face of a turbulent scenario."

Investors were disappointed at the end of last year after the government announced smaller-than-expected spending cuts, along with income tax exemptions for lower salaries that will be hard to compensate with extra revenue from higher wages.

Reflecting persistent fiscal worries and a more complex external scenario as the U.S. pushes higher tariffs, the view for the Bovespa in mid-2025 was also downgraded to 130,000 points from 137,351 three months ago.

It was the fourth consecutive reduction in Reuters polls for the outlook at that end-period.

Separately, the consensus estimate for the Mexico IPC stock index .MXX was 56,711 points, implying a 5.6% gain from 53,704.4 points on Monday. This forecast was just below 57,000 in November.

So far this year, Mexican stocks have advanced about 8.5%, as the government was able to temporarily defuse U.S. President Donald Trump's first tariff threats with some initiatives that are expected to be intensified.

But Trump said on Monday tariffs on Mexican and Canadian imports were "on time and on schedule" despite efforts by the two neighbouring countries to avoid them.

"Our estimate is based on a probable agreement between the governments of Mexico and the United States," said Humberto Calzada, chief economist for Latin America at Rankia Latinoamerica, before Trump's latest comments. Rankia's call for the IPC index was the most optimistic in the poll, with a forecast of 62,674 points at year-end.

(Other stories from the Reuters Q1 global stock markets poll package)