The bribery and corruption scandals surrounding Brazilian president Michel Temer have provided rich opportunities for foreign investment, according to a recent Bloomberg report. Between May 19 and 25, $760 million dollars flowed into Brazilian equities from global and regional funds, an amount unprecedented in the last five years. This followed a selloff in local markets on May 18 after the scandal broke.
Investors do not seem to have been discouraged by massive local protests in the country’s capital on May 24, which caused the agricultural ministry building to be set on fire. Mark Mobius, executive chairman of Templeton Emerging Markets Group, remarked that whether or not Temer is removed from office, his administration’s plan to spur growth through overhauling the pension system and labor laws will still likely go into effect. Mobius cited banking and retail stocks as having particular value. Morgan Harting, a portfolio manager at AllianceBernstein, has made similar predictions about the next administration, toting the value of Brazilian bonds.
Foreign investors have been eying Brazil with optimism for the last year and a half, predicting that it would bounce back from its worst recession in a century. Despite the political turmoil, emerging market investors are confident that Brazil has many companies that are destined for long and stable growth.
Recent Comments