Halister News

(Bloomberg) -- The real’s drop reflects potential that Brazil’s assets could serve as a hedge for investors seeking protection in case Donald Trump beats Hillary Clinton in the U.S. presidential election, Vladimir Caramaschi, chief strategist at CA Indosuez Wealth Brasil, said in a phone interview.

• Local assets seen as less expensive hedge than Mexico’s; high liquidity, along with recent months’ BRL and Brazilian stocks gains, also adds to conditions for hedging
• NOTE: BRL has dropped more than MXN since Oct. 28, after FBI reopened investigation on Clinton’s e-mails, causing her advantage over Trump to shrink
• BRL may drop further if Trump wins, given his “protectionist rhetoric”; if Clinton become president, there may be a relief rally
• “The market still expects a Clinton win, but fears Trump’s election. Because of that, it is seeking protection from a surprise”
• Eventual post-Trump-win commodities drop also could be a drag for BZ assets
• While first reaction is likely to be negative, extent of market losses will depend on Trump actual post-win policies; some proposals, such as those related to protectionism, may face resistance from both parties, including Republicans
• U.S. job report reinforces the case for Fed hike this year; rate increase mostly priced in