Foreign Capital Returns to B3 While Domestic Money Clings to Fixed Income

A stark valuation gap is opening up in the Brazilian stock market today. Foreign inflows into Brazilian equities have rebounded to R$ 38.6 billion in 2026, reversing a net outflow of R$ 32.1 billion in 2024, according to BTG Pactual’s latest "Brazil: Follow the Money" report. This return of global capital to B3 stocks comes even as local institutional and retail investors remain heavily concentrated in high-yielding domestic fixed income.

While international buyers seize on depressed valuations, local equity funds registered a net outflow of R$ 6.3 billion in 2026. Instead, domestic capital continues to seek shelter in high Brazil interest rates Selic. Local fixed-income funds captured a massive R$ 148.4 billion in net inflows in 2026, bringing their total assets under management to a staggering R$ 4.76 trillion. This domestic flight from equities has left local assets cheap for global buyers, who now account for 45.01% of the total trading volume on the B3.

The divergence is highly visible in the performance of major Brazilian ADRs and large-cap equities. On the market today, the benchmark Ibovespa index (IBOV) climbed 2.44% to 177,547.56. Heavyweights driving this momentum included Petrobras (PETR4/PBR), up 2.21% to R$ 42.58, and mining giant Vale (VALE3/VALE), which surged 3.96% to R$ 75.1. Leading financial institution Itaú Unibanco (ITUB4/ITUB) also edged up 0.87% to R$ 42.9.

For global investors looking to invest in Brazil, the ongoing domestic apathy toward equities has kept the broad Brazil ETF (EWZ) and local B3 stocks at historically attractive multiples relative to global peers. While the USD BRL currency pair continues to dictate the net returns for dollar-based investors, the steady influx of foreign capital suggests that international asset managers are increasingly willing to look past local macro noise to lock in cheap equity valuations.