Castlefield Stock Story - B3 S.A.
As well as being a footballing superpower, Brazil has the largest economy in Latin America. Central to its continued growth is Brasil, Bolsa, Balcão, SA, known as B3, which operates the main Brazilian stock exchange, helping to drive the economy.
In this latest featured stock story Castlefield Investment Analyst David Gorman introduces B3 - held in our Thoughtful World Equity Fund.
One of the favourites to win this summer’s FIFA World Cup 2026™ is, predictably, Brazil and it’s in the largest country in South America where we find our latest Stock Story.
According to the World Bank, Brazil is the biggest economy in Latin America[1] and it is vast, covering 3.2 million square miles (35 times the size of the UK[2]). It’s home to 205 million people and is the tenth largest economy in the world by total GDP.[3] Unlike several other nations in the region, Brazil’s economy is very stable, with GDP growth of around 2% and moderate inflation of 4%[4] in 2025.
Priorities for the Brazilian government include improving the business environment, fostering innovation, strengthening education, increasing savings and infrastructure investment and enhancing climate resilience.
Central to the development of the Brazilian economy is the company Brasil, Bolsa, Balcão, SA, known as B3 and a constituent of our TM Castlefield Thoughtful World Equity Fund. Based in Sao Paolo, the company was established in 1890 and it owns the Brazilian stock exchange.
B3 operates businesses in equities, derivatives, fixed income and credit, data and analytical solutions as well as technology and platform services. These business areas are supported by a back-office infrastructure that provides trading, post-trading, financing, data and systems, combining efficiency and security to serve investors, companies, financial institutions and society.
The businesses which make up B3 group are described by the company as either “Pro-cyclical” or “Recurring”. Pro-cyclical revenues come from stock exchange activities, which gain momentum during periods of declining interest rates and expanding economic activity, while Recurring revenues are earned from data analytics, technology services and fixed income and credit markets, whose performance is less affected by economic factors.
We have always thought that a properly regulated stock exchange like the one operated by B3 is vital to developing and maintaining a healthy economy.
We have always thought that a properly regulated stock exchange like the one operated by B3 is vital to developing and maintaining a healthy economy. The UN has identified two main mechanisms through which stock exchanges contribute to national development: [5]
Firstly, they mobilise resources for sustainable economic growth and development. Well-functioning stock exchanges direct resources into supporting domestic businesses, plus they facilitate inward investment by overseas companies and investors.
Exchanges around the world are increasingly focused on improving support and access to finance for small to medium-sized enterprises, or SMEs, as we see in the growth in the number of dedicated SME markets operated by large exchanges. SMEs are major providers of employment globally. In the US, for example, small businesses employ around 61.7 million Americans, totalling 46.4% of private sector employees.[6]
Many exchanges across the world offer sustainability-themed products and services, from ESG-themed indices to green bonds. These products promote companies that better manage environmental, social and governance (ESG) issues and help to mobilise funds which address sustainability challenges, an important concern in such a large and biodiverse country as Brazil.
B3 aims to improve internal processes by adopting better governance, transparency, diversity, climate management and environmental responsibility practices in its role as a market participant.
B3’s sustainability strategy is organised into two pillars. As a listed company, B3 aims to improve internal processes by adopting better governance, transparency, diversity, climate management and environmental responsibility practices in its role as a market participant. Secondly, stock exchanges act as knowledge leaders and promote good business practice. For example, they promote greater disclosure among listed companies via voluntary guidance, listing rules and training activities.
B3 sees its role in investment markets as a “bridge and lever;” a bridge because it connects companies, investors, regulators and other agents and a lever because it mobilises the market through training and products such as indices, data and technology solutions, creating ideal conditions for growth.[7]
Why do we like B3? The company continues to trade well, especially since it diversified into other, less cyclical business areas such as technology and data provision. B3 is valued at a significant discount to other global exchanges, such as London Stock Exchange and NASDAQ, even though it enjoys pre-eminence in South America. We expect this valuation gap to close over time, as the share price increases on the back of consistently improving financial performance and a buoyant economy in Brazil. The company has been returning excess capital to shareholders, most notably through share buybacks. A new CEO, Chris Egan, has recently joined[8] to help drive the business forward and we look forward to seeing how things develop.
Written by David Gorman
Disclaimer
Information is correct as at 02.06.2026. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment, capital is at risk.
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