Search Brazilian Properties Live Help Join Our Mailing List

No reason for investment in Brazil to be affected by elections, expert says

Date added: 8th October, 2010 at 13:28
(view all articles from October, 2010)

Categories: Economy

There is no need for those making an investment in Brazil to be concerned about the ongoing general election in the country, it has been claimed.

Urban Larson, director of emerging equities and Latin America specialist at F&C Investments, explained the markets were unlikely to be negatively affected by either Dilma Rousseff or her opponent Jose Serra winning the leadership.

The nation's current president Luiz Inacio Lula da Silva represents the Workers' Party and has been in power since 2002. In that time, he has introduced macroeconomic and social policies that have significantly decreased the number of Brazilians in poverty.

However, Mr Larson noted that, even as a left-wing politician, the leader was forced to move toward the centre in order to win the votes of the middle classes.

Lula, as he is commonly known, remains a popular president with the Brazilian people and is backing his successor in the Workers' Party Dilma Rousseff for the leadership.

According to the expert, markets are likely to be neither worried nor excited if the candidate wins - which he feels is probable - as it is likely her predecessor will continue to work behind the scenes.

Meanwhile, if Mr Serra enters government, the specialist sees investors reacting positively, although he admits this is an unlikely outcome.

In the first round of voting on October 3rd, Ms Rousseff came out in the lead with 47 per cent, but she needed 50 per cent to become president.

Brazilians will post their second ballot on October 31st, when the overall winner will be decided.

Mr Larson believes the results of the first vote will influence Ms Rousseff's political approach.

"At a minimum, the fact that Dilma did not win in the first round while the opposition did well in several key state elections makes it more likely that she will need to govern from the centre," he stated.

Chris Palmer, head of global emerging markets at Gartmore, does not feel that the Workers' Party representative lost out in the first round due to opposition from Mr Serra.

Instead the industry professional pointed out Green Party leader Marina Silva had taken 20 per cent of the votes, which he suggested shows the population is becoming increasingly sympathetic toward environmental issues.

The expert predicted Ms Silva's supporters would back Ms Rousseff in the next ballot, seeing Lula's successor enter government.

The country is "an exciting market", Mr Larson asserted, with increased wealth, economic stability and social mobility driving domestic demand.

He stated the nation was affected to a certain extent by the global financial downturn, but was not hit as hard as more developed countries.

"Brazil used to finance itself on the overnight credit markets," the commentator said. "Now it is an international creditor."

For anyone wishing to invest in the full potential of Brazil, Property Bond Brazil has an excellent array of opportunities for investment in Brazil. ADNFCR-1477-ID-800106580-ADNFCR