A couple of recent articles point to the uphill battle faced by Brazilian financial markets. And, unfortunately, there is no respite in sight.
Equity markets have been whomped. The key Bovespa indexes continue to stagger and even smaller, retail-oriented companies are faring poorly. Meanwhile, interest rates have continued to rise with little transparency on how much further they could go thanks to stubbornly high inflation and a finance minister who has little credibility and so cannot truly direct sentiment.
Latin Finance runs an article about the end to yet another poor year for primary equity markets with a weak showing for Via Varejo, whose follow-on deal closed substantially below an admittedly optimistic pricing range. It seems that even retail, once the darling of investors in Brazil, is not immune from the generalized malaise http://www.latinfinance.com/Article/3289888/Brazilians-close-ECM-year-on-low-note.html#.Uq8F2_RdVDQ
Meanwhile, local papers report that Brazil is accounting for a far smaller share of Latin debt issuance than in previous years. Through the start of November, Brazil accounted for just $557m out of a total of $10.6bn. Brazil is usually the largest single issuer. Why is that and what changes might be needed to reverse the trend? Newspaper Valor has some interesting theories (in Portuguese). http://www.valor.com.br/financas/3372520/pais-perde-participacao-nas-captacoes-da-america-latina#ixzz2ne5PqmKy
It is unlikely that next year will be much better, overshadowed by a government paralysed by the World Cup and presidential elections in October. Sustained policy drift with erratic bouts of populist intervention has, for now, sealed the fate for Brazilian markets.