BUDAPEST, Hungary, August 5, 2016 /PRNewswire/ --
As the opening ceremony of the Olympics is
approaching, the multifaceted Brazil gets more and more attention and many
agree that the event can put the country in an even worse financial
situation than it is in now, believes Innovative
Securities.
The financial company reminds: "Brazil assets started to recover this year and
the stock market is among the best-performing markets in 2016 in
dollar terms". Besides, they add, the Brazil real advanced 20% against the US
dollar, which also proves Brazil
is among the leaders this year. All these factors fit perfectly in
Innovative Securities' analysis posted in February, which projected
a significant upside potential of the Brazil's stocks and assets despite the general
markets' predictions.
This outstanding stock market performance is a result of several
things, such as the compelling turnaround on the commodity market
during Q1 which has healed the export-oriented economy, said
Innovative Securities. We cannot ignore the political changes
either, they said. "Michel Termer may reduce the immense budget
deficit and rebuild trust that the former president has lost."
The new economic plan may be conducive to get back the
investment grade of the country as well as pull Brazil out of its worst recession, believes
Innovative Securities, adding: "For this, fundamentals should
perform better, while Brazil still
has the highest interest rate at 14.25% with inflation around
8-9%." Changing these requires deep structural reforms and the
reform of the taxation system.
Although since their analysis in February the iShares MSCI
Brazil Capped ETF (EWZ) rose near 60%, there may be insecurities as
well, added Innovative Securities. Since 2012 the lowest outflow
was measured from the emerging market equity funds, but the
developed ones faced the biggest since 2011 due to the higher
uncertainty. Braver investors can still find excellent targets in
Brazil, summarizes Innovative
Securities. But, they add, let's keep in mind the always
reappearing political risks and the effects of the sudden
turnaround of the oil price rise seen in the last two months. The
debt crisis is still on the agenda.
Furthermore, it is not quite clear either, how Brazil will overcome the huge social
discontentment and contrast after the Games, concludes Innovative
Securities, adding: "Any shock can send the Brazil real back to ground as well as the
value of the Brazil stocks."
For more information:
Innovative Securites Web
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