According to this FT article, Brazil is shaping up to be one of this year’s worst-performing equity markets. A toxic combination of rising inflation and political interference in the country’s biggest companies has hampered public offerings. But it has also opened up buying opportunities.
In spite of the country’s booming economy, the Bovespa stock index is trading at about a 14-month low and foreign investment in the market fell 70 per cent in the first half of the year, central bank data show. The exchange operator itself has seen its shares tumble 25 per cent in 2011.
In another side note here, Itau Unibanco was downgraded by Credit Suisse to “neutral” from “outperform”. Brazil’s banks have tumbled this year, with MSCI Inc.’s gauge of the nation’s financial shares posting the second- largest drop of 10 industries, after the central bank boosted interest rates, reserve requirements and taxes on consumer loans to slow credit growth. The fastest inflation in six years and higher delinquency rates will likely push the industry to set aside more cash for defaults, hurting margins, Marcelo Telles, an analyst at Credit Suisse, said in the note to clients.

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