Brazil College Stocks Give Reprieve From Ibovespa Swings

Career College Central Summary:

  • Brazil’s education companies are delivering the steadiest returns for investors during the most volatile period for the country’s stocks in two years.
  • Kroton Educacional SA (KROT3), Brazil’s biggest operator of for-profit colleges, has posted the best risk-adjusted return in Brazil this year with smaller rival Estacio Participacoes SA (ESTC3) delivering the third-best gains.
  • The stability is in contrast to the benchmark Ibovespa gauge, where price swings over the past 50 days are at the highest since 2012 as investors wager on the outcome of this month’s presidential elections.
  • Education companies have benefited from the expansion in student loans championed by President Dilma Rousseff, an initiative that will continue no matter who wins the runoff vote Oct. 26, according to Canepa Asset Management and Quantitas Asset Management.
  • Shares of companies such as Petroleo Brasileiro SA (PETR3) and Banco do Brasil SA are more dependent on the outlook for the election, with investors wagering that challenger Aecio Neves would be better for the shares than Rousseff.
  • “Markets are exaggerating their reaction now to election prospects, but there are some sectors that will surely recover as this current volatility ends,” Alexandre Povoa, a parter at Canepa, said in a telephone interview from Rio de Janeiro.
  • “We don’t expect either of the candidates to change the policies regarding student loans.”

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