Economic results and uncertainties shake stock exchange investor confidence
Most Brazilians are starting this week feeling the lingering effects of a hangover after the unexpected loss of their national soccer team to Belgium in the World Cup quarter-final game last Friday. This will not help to overcome the somber mood that has reigned in the country for the last couple of weeks.
The economic effects of May’s 11-day truckers’ strike are now emerging and many might regret having ever supported it. Industry output in May experienced its worst monthly result since 2008 and June’s inflation rate was the highest in 23 years.
The index that measures consumer confidence saw a sharp decrease in June and hit its lowest level since April 2016, when the country was engulfed in Rousseff’s impeachment process.
Stock market investors have been seized by risk aversion due to uncertainties towards October’s presidential elections, as no clear market-friendly candidate with any strong chance of victory has yet emerged.
Ever-increasing judicial activism has also been making some investors fearful and on Sunday this trend came together with the elections when an appellate judge issued a decision to release former President Lula, who is serving time in prison on a bribery conviction.
The decision was quickly overruled by an appeals court, but the incident underscored just how messy the electoral scenario is. Although in prison, Lula is still the front-runner in all voting intentions polls, with around one-third of preferences.
But Lula also has one of the highest voter rejection rates. It is very unlikely that he will be able to run in October, but anyone he picks as an alternate could come up with more votes than most of the current candidates.
The views and opinions expressed in The Pulse are PATRI’s own and do not necessarily reflect the views and opinions of the Brazil-U.S. Business Council. For additional information please email Carlos Eduardo Lins da Silva, at firstname.lastname@example.org.More Testimonials