JPMorgan links Brazilian construction sector performance to 2026 election outcomes
The bank forecasts residential construction stocks will diverge based on which political party wins the November 2026 vote, with higher-income firms favored by potential fiscal adjustments and lower-income firms benefiting from current housing programs.
JPMorgan predicts that the performance of Brazil's residential construction companies will increasingly depend on political sentiment surrounding the November 2026 election. A change in government is expected to favor medium- and high-income developers, specifically Cyrela (CYRE3) and EZTEC (EZTC3), due to anticipated tighter fiscal adjustments. Conversely, continuity of the current administration would benefit low-income firms like Tenda (TEND3), Direcional (DIRR3), and Cury (CURY3) through support for the Minha Casa, Minha Vida program. Under this scenario, JPMorgan maintains a buy recommendation for Tenda, Direcional, and Cury, while keeping Cyrela and EZTEC neutral due to market uncertainty in 2027. The bank also holds MRV (MRVE3) neutral, citing potential losses from its US rental property division Resia in the second half of the year. Risks to the low-income thesis include inflationary pressure driven by crude oil prices exceeding $80 per barrel and a slowdown in CEF mortgage disbursements. Additionally, scheduled strikes by Caixa Econômica Federal employees could impact financing flows.
