The stock market and the dollar suffered no major shocks after the coup acts. Analysts consulted by UOL They say the situation is driving foreign investors away, but the impact should be shortterm and nothing should change in Brazilian politics.
Why didn’t the market tremble?
- The response is milder because the Three Forces’ response has been harsh and synergistic, says Mauricio Valadares, partner and CIO at Nau Capital.
- Luis Novaes and Régis Chinchilla of Terra Investimentos’ analysis team agree: the government’s countermeasures may have allayed concerns about new events like yesterday’s.
- What happened is pretty serious, but the market is always working ahead and expecting normality to return, says Valadares.
- For investors, coup acts should not bring about a change of government.
- “The market understands that what happened yesterday, although tragic, ugly and humiliating for the history of the republic, is priceless. [não altera o mercado na Bolsa]”, says Matheus Spiess, analyst at Empiricus. “There will be no institutional rupture, there will be no coup d’état,” he says.
- Though it was big, it was also an isolated act, says Rodrigo Cohen, an investment analyst and cofounder of Escola de Investimentos.
- For Ilan Arbetman, research analyst at Ativa Investimentos, while risk perceptions in the country have been impacted, they are not affecting the ability of companies to grow on the Brazilian stock exchange.
- The acts of vandalism were not encouraged by any political front and do not pose a significant institutional risk, says Gabriel Araujo Gracia, Guide Investimentos.
- On the other hand, Spiess says the legislation will have implications for President Lula’s governance for years to come.
How is the Brazil risk and foreign investment?
- The invasions and acts of vandalism made headlines in several newspapers around the world. This damages Brazil’s image for foreign investors and increases the risk of putting money on the Brazilian stock exchange, analysts say.
- Until then, foreign investors were more optimistic about Brazil than domestic investors and invested more money in the stock market.
- Now the market believes the optimism can be scaled back, says Nenad Dinic, equity strategist at Julius Baer.
- Kohen disagrees. According to him, foreign investors invested BRL 100 billion in Brazil in 2022, and the real was one of the currencies that appreciated the most. “From my point of view, nothing will change for the time being,” he says.
- Experts warn that the possibility of a global recession and China’s struggles to restart its economy continue to weigh on markets around the world, including Brazil.
What does the market expect in the next few days?
- “There will be tense days in the markets and in the nation until the Planalto restores order and the military takes a stand forever,” says economist André Perfect.
While we do not rule out the possibility that more violent protests could affect the market in the near term, investors’ focus remains on macroeconomic issues.
Nenad Dinic, strategist at Julius Baer
What consequences do analysts expect for politics and business?
- The current government will face the great challenge of walking four years in the face of a totally divided society that is increasing instability and insecurity, says Dan Kawa, CIO of TAG Investimentos.
- The conflict situation can strengthen the left wing of the government and encourage excessive public spending.