Brazil Daily Briefing

ITUB jumped 5.44% to $8.53 and BBD gained 4.76% to $3.52 in what looks like a combination of quarter-end index rebalancing and positioning ahead of Q3 earnings season kicking off in mid-October. Brazilian bank fundamentals remain solid — Selic at elevated levels sustains NIM, and credit-loss provisioning has been trending down through H1 2026. The setup into earnings is constructive: any beat on NII or asset quality guidance will extend this move; a miss on provisions is the only credible downside catalyst.

XP Inc. added 3.58% to $20.995 and Nu Holdings gained 2.51% to $12.66, pushing the fintech sector to the session's best performance at +3.04%. The move likely reflects dual tailwinds: EM risk appetite improving into month-end, and growing conviction that BCB's Selic path — expected to stay restrictive but plateau — favors Nu's credit-card spread model while boosting XP's fixed-income AUM. Watch Nu's Q3 delinquency data closely; if NPL trends hold at Q2 levels near 6%, the stock re-rates toward $14.

While Brazil ripped, EWM fell 0.96 points to 71.09, SQM lost 1.83% to $64.87 on continued lithium price pressure, and BAP dropped 1.08% to $379.87 amid Peru macro noise. The divergence is not random: MSCI LatAm rebalancing at quarter-end mechanically overweights Brazil (now ~60% of ILF), and Mexico-specific headwinds — nearshoring capex hesitation, peso volatility — are keeping non-Brazil EM selectors on the sidelines. This spread (EWZ outperforming EWM by 345 bps in a single session) is not sustainable at current pace but directionally reflects where institutional flows are landing in Q4.