POLL-Brazil stocks to add gains, real-estate and service sectors in spotlight

By Gabriel Burin and Noe Torres

BUENOS AIRES, May 28 (Reuters) - Brazil's stocks will likely record additional gains this year, boosted by the continued strong performance of real-estate and service sectors, despite a possible economic slowdown ahead, a Reuters poll showed.

The benchmark Ibovespa market index .BVSP touched record highs earlier this month after picking up strongly from a slump at the end of 2024, boosting Latin American equities .MILA00000PUS.

It is expected to remain underpinned by big names like lender Itau Unibanco ITUB4.SA and companies benefitting from government plans to increase home ownership, as well as growth in a host of booming services.

The Ibovespa is set to advance 6.8% more to 147,500 points at end-2025 from 138,136.14 on Monday, according to the median estimate of 12 equity strategists and analysts polled May 15-27.

"The real estate sector, other than luxury real estate, continues to do very well mainly due to government incentives," said Gustavo Cruz, chief strategist at RB Investimentos.

New home sales related to the "Minha Casa Minha Vida" federal program skyrocketed 41% last quarter compared to the same period in 2024, construction chamber CBIC said last week.

Sao Paulo's stock exchange IMOB .IMOB real-estate sector index has seen an impressive 37.7% rise so far in 2025, reaching its highest level since mid-2021 in May.

Cruz pointed to a favorable outlook for companies like gym firm Smartfit SMFT3.SA, hair removal chain Espaco Laser ESPA3.SA and car rental company Localiza RENT3.SA.

Such firms have become leaders in their segments, outplaying competitors and taking advantage of Brazilians' rising demand for personal services, he added.

At the same time, the potential launch of a monetary easing cycle in the second half of this year as the economy cools should give additional thrust to local stocks, according to Ativa Investimentos.

"The expected start of the Selic (interest) rate-cutting cycle contributes positively to the equity market's momentum", Ativa analysts wrote in a report that also cited attractive stock multiples and an absence of corporate risk.

On the negative side, market participants mentioned worries from Brazil's challenging fiscal situation, which last week saw a precipitous tax hike reversal, along with U.S.-provoked trade tensions.

Meanwhile, Mexico's stock market is set to lag Brazil's due to feeble activity trends locally combined with weaker economic prospects in the U.S., the main destination for Mexican exports.

"Fundamental valuations prevent the local market from maintaining the highs we had already seen in the first half of 2024," said Roberto Solano, research manager at Monex Grupo Financiero.

The benchmark IPC index .MXX is forecast to trade at 58,500 points by year-end, virtually unchanged from 58,459.16 on Monday. Year-to-date, the Mexican IPC is up a solid 18% and the Brazilian Ibovespa 14.8%.

(Other stories from the Reuters Q2 global stock markets poll package)