The manager, who helps run the Allianz RCM Brazil fund said the country’s recent shift from tight to loose monetary policy supported its investment case.
He said when interest rates come down in an area it is positive for corporates, but added that he was still defensively positioned due to the global economic slowdown.
Leo said his defensive position was because of headwinds in the society stemming from the tightening cycle that has until recently been in place.
The Brazilian central government was following a tightening cycle up until August in an aim to keep the Brazilian real from appreciating, and exports from becoming uncompetitive.
One concern Leo has is that loosening is premature and the government has acted too fast.
Despite this, Leo thinks now is an appealing entry point into Brazil, as the market typically trades on a premium.
He said the Brazilian investment case was affected by issues surrounding the eurozone debt crisis and the US downgrade.
For any sustained recovery he thinks the global backdrop needs to be less difficult and for that reason predicted a slowdown of domestic growth.
But reducing interest rates has taken pressure of the foreign exchange and the labour market is very strong.
Like most emerging markets Brazil will survive or thrive based on the consumer demand and with the softening exchange rate, he said that can only become a more positive story.
