Gone are the days when Brazilian investment decisions were based largely on economic reports and company earnings. Now, asset managers and analysts say they’re more likely to scour the headlines of local newspapers for the latest political developments.
The market is eagerly clinging to every bit of news out of Brasilia, the nation’s capital, as President Dilma Rousseff fights for her political survival and congress is gridlocked over austerity measures needed to avert a credit-rating downgrade to junk. Reports of bills being shelved, back-door negotiations hitting road blocks and a sweeping corruption scandal drawing ever closer to Rousseff are enough to trigger swings in the real, bonds and stocks.
“I wish I had a degree in political science,” said Will Landers, a money manager who helps oversee $2.7 billion of Latin American equities at BlackRock Inc. “It’s something we have to follow more closely than the economy or finances. Every time we think things will calm down, something else comes up.”