Brazil Outflows Reflect Global Risks, Pending Reforms: Analysts
(Bloomberg) -- Capital flows remain negative even one month after Rousseff’s impeachment, reflecting the impact of global risks along with the perception that the country’s political shift has been broadly anticipated by the markets, analysts say.
- “We already saw a big repricing. We are now in a moment of seeing the facts, such as the improvement of data, reforms approval, capital inflows,” Leonardo Monoli, partner at Jive Asset, says in a phone interview
- NOTE: BZ net foreign exchange currency flows at -$2,253 from Sept. 1-23; -$12,474 YTD
- BRL’s recent volatility also follows global concerns on U.S. election, Deutsche Bank, Italy referendum and China’s property bubble and distressed assets in banking sector, Monoli says
- “Brazil hasn’t yet done what it was supposed to do,” Hideaki Iha, trader at Fair Corretora de Cambio, says. “What have we had so far besides the impeachment?”
- Expectations and confidence have improved, but we haven’t seen reforms; we need to see the approval of the spending cap bill
- Brazil assets may advance further after reforms, which could help the country regain its investment grade, Pablo Spyer, director at Mirae Corretora
- NOTE: Senate approved impeachment of Rousseff on Aug. 31; anticipating the political shift, BRL gained 22% and Brazil stocks jumped 64% YTD in dollar
- NOTE: Spending cap bill, one of the Temer government’s proposals to curb the country’s debt increase, is expected to start being voted in Lower House next week
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
People Hideaki Iha (Fair Corretora De Cambio E Val)
Leonardo Monoli (Jive Asset Gestao de Recursos Ltda)
Michel Temer (Federative Republic of Brazil)
Pablo Spyer (Mirae Asset Global Investments)
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