HALISTER1: Brazil Market Sees Temer Win as Imperfect Proxy for Pension Vote

Brazil Market Sees Temer Win as Imperfect Proxy for Pension Vote

(Bloomberg) -- Brazil assets erased gains with broad EMFX risk-off, suggesting investors don’t regard govt labor reform vote as perfect proxy for more challenging pension regime proposal, said Maua Capital’s Luiz Fernando Figueiredo and Mauricio Oreng of Rabobank.
  • Country got a “historic day” with Wednesday night votes, such as modernization of its labor laws, Figueiredo, Maua’s chief executive and an ex-BCB director, said in an email
    • Chances of pension reform being passed have increased, yet “we still aren’t there”
  • While labor reform was a positive step, uncertainties over pension regime reform weren’t eliminated, Rabobank strategist Oreng said in phone interview
  • Labor reform isn’t a good indication of what will happen with pension proposal, which requires more votes to be approved since it’s a constitutional change, Rafael Cortez, analyst at Tendencias Consultoria, said in phone interview
    • Pension regime is more politically sensitive as it involves public employees, while labor reform is more focused on private-sector workers
    • Anti-reforms strikes and protests scheduled for Friday are unlikely to stop Congress from voting on reforms
    • Protests may reinforce idea that govt has little time to pass its economic agenda in Congress ahead of 2018 electoral year: Cortez

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Luiz Figueiredo (Maua Capital SA)
Mauricio Oreng (Banco Rabobank International Brasil SA)
Rafael Cortez (Tendencias Consultoria Integra)

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