Milltrust Alert – Selected Insights from the Emerging Markets

Key Stories

BRAZIL: After a favourable result in the first round, Jair Bolsonaro (PSL) obtained the majority of the valid votes in the election held on October 28. Brazil’s stock market and currency have rallied his victory. President Jair Bolsonaro based his bid on a platform which is conservative in terms of customs but liberal in its economic proposals, with his adviser and likely future finance minister, Paulo Guedes, acting as the “guarantor” of his economic program.

As usual the new president will only be sworn in on January 1st, 2019. Thus, until the end of the year the market will focus on the formation of the new government itself and the proposals announced by its new ministers. The new president’s point of departure appears to be very favourable: his party, which was politically insignificant, has emerged from these elections as the second largest force in the Lower House, thus becoming the fundamental basis of the political coalition that will debate delicate themes, such as pension reform, in Congress during the next parliament.

From an investment point of view the reduction of the uncertainty inherent to the electoral process, coupled with an environment of low interest rates and accelerating growth, may generate interesting opportunities in local markets. The outlook tends to be particularly positive for equities, fixed interest rates and the long price index.

Key Soundbites

Key Investment