The political turmoil is engulfing the entire American continent. From South to North, calls for impeachment are being heard from top to bottom. One is Trump, who with his tumultuous and reality-TV presidency has become a nuisance for investors at home and abroad. The other, Michel Temer, however is President who was installed after the ouster of previous one on corruption charges, has been ironically being investigated for same charges against him. The two may not have a lot in common in terms of their troubles but they have investors on their edge.
Brazilian economy after a myriad of scandals and ousters was only beginning to get better under Temer’s market friendly policies until yesterday. The market went experienced a metaphorical earthquake when news of Temer’s alleged corruption was broke by a local newspaper. The allegations made in the daily informed of a recording where President Temer had mentioned that he had sent hush money to the imprisoned former speaker of the lower house of Congress. After the news broke out, it spread like wild fire. Within minutes the markets came tumbling down, opposition in the Congesso Nacional filed for Temer’s impeachment. Opposition parties within the next few hours called for protests around the country for new election calling the sitting government null and void amidst the unproved allegations.
People came out on roads to protest against the President Temer calling him a thief and liar who should be jailed. Come the Government machinery in play, tear gas shells, stun guns and water cannons were used to stop the protestors from entering the President House. Resentment against Temer was already brewing, being elected after Rousseff’s ouster; the man had single digit approval ratings. He came into office as Rousseff’s vice president. Ever since his inaugural, eight of his cabinet ministers have been fired over allegations of misconduct and four are currently under investigation. Thursday’s events may prove to be the final nail in the coffin for President Temer, with supporting ministers jumping ships and cabinet ministers threatening to resign, confidence for Temer amongst his own allies is losing ground.
Brazilian Stocks dipped 8.8% on Thursday, Brazil Bovespa, the Brazilian benchmark index saw its worst day since 2008. U.S. listed stocks of major Brazilian shares that took a dip were; Petrobras fell 15.4%, Banco Bradesco fell 13.4%, Vale SA fell 8% and Itau Unibanco the largest financial conglomerate in Brazil fell 12.1%.
The BRAZIL REAL fell more than 7.5% against the US dollar on Thursday.
Argentina, who does most of it trade with Brazil also fell 2.95%, witnessing its worst ever day in the stock market during 2017. Argentina is one of the two countries, other than Pakistan, that was included in the MSCI – EM during their annual review.
