Morgan Stanley is projecting selective growth in Latin American retail and eCommerce for 2026. The firm expects rate cuts in Brazil to provide a tailwind, but anticipates that weak consumption will limit a widespread recovery. Their analysis favors stock-specific drivers over broad consumption trends, which are expected to grow under 1% in real terms.

Morgan Stanley upgraded C&A Modas, citing improved execution. They also reiterated an overweight rating on Lojas Renner and Vivara. Conversely, the bank downgraded Azzas 2154 due to operational disruptions and cut GPA to underweight, pointing to leverage concerns. For eCommerce, the bank forecasts 16% year-on-year growth, taking the market to over $230 billion.

MercadoLibre remains the firm's top pick, supported by scale and fintech integrations. The firm anticipates a reacceleration in profitability in 2026, driven by advertising and credit. Exposure to Argentina offers upside potential if the macro conditions improve after the October 2025 midterm elections, particularly benefiting companies like MercadoLibre.

These ratings changes reflect a nuanced view of the Latin American retail sector. While lower interest rates in Brazil should help, the overall impact appears limited. Investors should watch eCommerce and shopping malls for growth opportunities. The bank's selective approach suggests that individual company performance will be key.