Despite heightened volatility stemming from US President Donald Trump’s tariff hikes and renewed concerns over the enforcement of the Magnitsky Act in Brazil, trading in American Depositary Receipts (ADRs) of Brazilian companies in New York has surged to its highest level in two years.
According to data from Economatica cited by InfoMoney, average daily ADR trading volume reached US$2.15 billion at the beginning of this week, the strongest since 2022.
That figure represents roughly 40% of the US$5.37 billion traded daily on Brazil’s stock exchange, B3.
The calculation excludes activity from Tuesday (19) and Wednesday (20).
For comparison, ADR trading averaged US$1 billion per day in 2024, equivalent to 30% of B3’s US$3.4 billion daily turnover.
In 2023, the average was US$1.1 billion, or 27% of B3’s US$4 billion.
In 2022, volumes had reached US$1.9 billion per day, accounting for 40% of the US$4.7 billion traded domestically—a level now being matched once again.
Foreign appetite and market dependence
Many strategists view the recent uptick in ADR trading as further evidence of the critical role foreign investors play in Brazilian equities.
Analysts note that the heightened demand reflects both the global appetite for emerging-market exposure and Brazil’s ongoing reliance on international investor sentiment.
ADRs are often seen as a more convenient entry point for global investors, offering dollar-based instruments tied to Brazilian companies without the complexities of trading directly on the local exchange.
Rising volumes abroad reinforce the perception that the pricing of many Brazilian stocks is increasingly shaped in New York rather than São Paulo.
Some experts caution that this dependency could deepen in the months ahead.
The preference for ADRs also suggests a degree of caution among foreign investors.
Instead of deploying capital directly into Brazil—where local banks are under growing strain—international buyers are gravitating toward ADRs of companies with solid balance sheets and attractive long-term return prospects.
Banks under pressure from the Magnitsky Act
The latest surge in ADR activity comes amid mounting pressure on Brazil’s banking system, following a Supreme Court ruling that has drawn the sector into the middle of a legal and diplomatic dispute.
Justice Flávio Dino ruled that foreign laws cannot be applied to Brazilian citizens for acts committed within Brazil, creating uncertainty over how domestic financial institutions should handle US Magnitsky Act sanctions.
The law, which allows Washington to impose penalties on foreign officials, recently targeted Supreme Court Justice Alexandre de Moraes.
For Brazilian banks with US operations, the ruling presents a dilemma: if ordered to freeze accounts or enforce American restrictions, they would face conflicts between US compliance requirements and Brazilian legal protections.
The uncertainty triggered a sharp sell-off in banking shares. On Tuesday, Itaú Unibanco, BTG Pactual, Bradesco, Banco do Brasil and Santander collectively lost R$41.98 billion in market value, according to consultancy Elos Ayta—a sum nearly equivalent to Caixa Seguradora’s current valuation of R$40.74 billion.
Risk perception and capital flows
Analysts warn that the legal conflict with the United States may heighten perceptions of risk in Brazil.
However, they note that the immediate impact on ADR liquidity is most likely modest.
Large Brazilian corporations have been trading ADRs in New York for decades, and international investors may instead shift their shares to companies with superior governance, global exposure, and less reliance on domestic politics.
While others worry that foreign capital inflows may be impeded if risk aversion rises, there has been no significant adjustment thus far. Nonetheless, the situation has weighed on the currency and increased vulnerability to global opinion.
The most traded ADRs
Among the most actively traded ADRs, commodity and energy heavyweights take the lead.
Vale and Petrobras are at the top of the list, with trade volumes exceeding those on the Ibovespa.
Only two banks, Itaú Unibanco and Bradesco, rank among the top ten.
In 2025, Itaú recorded US$168.354 billion in ADR trades, while Bradesco reached US$102.187 billion, according to Economatica.
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