22nd May 2017
Brazil Recovery Story in Jeopardy
Brazilian President Michael Temer is being threatened with impeachment after recordings surfaced allegedly showing his involvement in corrupt payments to an already jailed former speaker of the parliament.
The MSCI Brazil was up 15% for the year on Tuesday, it is now down 4.5%. The reason for this aggressive reaction of the market is that investors had become extremely optimistic about the reform programme the generally market-friendly Temer was promising to implement: his social security reforms would put the country’s public finances on a surer footing.
We have heard a lot of punditry over the past 12 months suggesting that political risk is greater in developed markets than emerging markets following the Brexit vote, a nice bit of salesmanship from emerging market managers. Call us when two consecutive UK Prime Ministers are impeached for corruption.
Our full Market Commentary is available to read below.