posted at 02:50
Author Name: Mike Bird
Fleeing Investors Are Decimating Brazilian Equities After The Election
Global investors are selling off Brazilian equities this morning, after Dilma Rousseff was narrowly re-elected as the country's president Sunday. Markets were hoping for a win from pro-business candidate Aecio Neves, and are expressing their disappointment this morning. In Frankfurt, part-nationalized Brazilian energy giant Petroleo Brasiliero is down 10.78%. And in Paris, the Lyxor ETF Brazil, an exchange traded fund that tracks the country's Ibovespa index of equities, is down 9.42%. It's the same story across the world. "Over the last four years, the Ibovespa has fallen close to a third, and it is down slightly this year-to-date. The real has weakened 33% since Ms. Rousseff took power, and markets-correctly, in our view-see few signs of hope for a turnaround. We doubt Ms. Rousseff will begin the significant shift to a more market-oriented economy that the country needs. The economy will continue in its slow growth, high inflation, mode for the foreseeable future. We therefore expect markets to remain under pressure."

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