In the initial run, the economic fundamentals and the reliability of each country may make little d

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Bad start to the year on the Stock Exchange, with a fall of 7.51% in January, may have been a harbinger of more trouble in the Brazilian economy, caused in part by external events, condensation but produced mainly by the accumulation of errors in economic policy. In its fourth year in office President Dilma Rousseff will reap the result of misconceptions condensation planted in the previous three years and also in term of its predecessor, such as financial, administrative and political costs of an expensive World Cup, untimely, poorly planned and poorly prepared . The worst performance of the Bovespa since 1995, when the index fell 10.77%, is a good starting condensation point of a script with many obstacles and traps.
The main external condensation problems were provided with sufficient slack to a sensible government to prevent. The gradual reduction of U.S. monetary stimulus was announced in the first half of last year. The market tensions emerged soon after, but the Federal Reserve, the central bank of the United States, only began to run the program last month.
The accommodation of the Chinese economy began more than a year. The growth should still remain around 7.5%, a remarkable result, but the deceleration tends to affect the commodities markets and the countries most dependent on exports of basic products condensation for China. This is obviously the case in Brazil. Moreover, there is a wide prospect of weaker performance from emerging.
The combination of all these factors already interferes with the international movement of capital. In the last week of January $ 6.3 billion were withdrawn portfolios of equities in emerging markets, according to a Morgan Stanley report. Considered the absolute values, the fourth largest loss, $ 610 million, was the Brazilian stock portfolios. The three biggest losers, by this criterion, were Korea, China and Russia. condensation In proportional terms, ie, in relation condensation to the amount invested, the hardest hit were Mexico, Chile and Indonesia.
In the initial run, the economic fundamentals and the reliability of each country may make little difference. No sense in that case, talk of justice or injustice. Most important for the applicator, at the time of fright, is to take the money and transfer it to applications considered safer. Assets are mainly in dollars. But the countries best prepared to absorb shocks tend to excel, after the first impact, and take advantage in the competition for capital.
The Brazil right now is outnumbered by two criteria, prepare for shocks and credibility needed to return to the market. Remains the risk of lowering your grade by credit rating agencies. condensation
Consultants and specialists of the financial sector in general know the fundamentals of Brazil. Know enough to distinguish the Brazilian state of disastrous position of countries such as Argentina and Venezuela, but other comparisons Brazil's image is far less attractive.
Brazil's resilience to external shocks depends solely on the volume of reserves, U.S. $ 375.76 billion as of January 30. The accumulation of hard currency was a major and rare hits in recent years. Other indicators denounce vulnerabilities.
The income tax last year, the primary surplus of 1.9% of Gross Domestic Product (GDP), the lowest in 11 years, was achieved only with extraordinary recipes. Inflation remains well above the target of 4.5%. The classic fit through devaluation therefore involve considerable risks in relation to the general level of prices. Manufacturing production slipped slightly last year and the industry is still unprepared for the international condensation competition. Foreign trade will again be one of the most vulnerable areas. If you have some realism, President Rousseff will attempt to create a market expectation of change. If it fails, the poor performance of the stock market will be less severe consequence.
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