BUENOS AIRES/MEXICO CITY: Brazilian stocks are poised to notch more modest gains, ending 2020 with a minor setback and almost fully recovered from the coronavirus-related panic of the first quarter, a Reuters poll of market strategists showed.

They will still likely underperform record-breaking Wall Street, on worries over the second highest toll of coronavirus cases in the world after the United States and on investor nervousness around a ballooning fiscal deficit.

Despite the pick-up in domestic equities, the spread of Covid-19 and its impact in Brazil and other emerging markets saddled with chronic problems have led many investors to cut local exposure and add more US stocks on hopes of a quicker recovery in the world's biggest economy.

The benchmark Bovespa stock index is forecast to finish this year almost 5.0% below where it ended 2019. This would conclude a four-year rally but is still up 60% from the market nadir at the start of the health crisis in March.

The median estimate of 17 equity strategists polled Aug. 12-25 for the Bovespa at the close of the last trading day of December is 110,000 points, up more than 7% from now and well above the 89,700 mark forecast in May. Estimates were in a 104,000-125,000 point range.

"The upside could lose intensity if the persistent Covid-19 spikes again and forces new lockdowns globally, but any potential correction wouldn't be severe," Alexandre Marques, an analyst at Elite Investimentos in Sao Paulo, said, citing the ongoing reach for risk amid loose financial conditions globally. The Bovespa's advance stalled in August on growing concerns that President Jair Bolsonaro's government could ditch strict austerity rules.

In Mexico, the S&P/BMV IPC index is set to finish the year at 39,750 points, just below 40,000 forecast in May. This would leave it down about 9.0%, at its worst close in nine years.