Optimism Leads to a Record-Breaking Result in Brazilian Stock Market

09/12/2017 - 12h31

On Monday (the 11th) the Brazilian stock market broke historical new ground. The main Ibovespa indicator went up by 1.7%, reaching 74,319 points. This was the first time ever that the best-performing stocks surpassed the 74 thousand-point pinnacle.

The rise indicates the consolidation of an upward trend that began in mid-June and has made the main indicator of the Brazilian stock market grow 23.4% this year.

A combination of positive factors led to the historic apex - the main one being the level of confidence that investors have displayed concerning the recovery of the Brazilian economy.

"The main reason for this increase is the recovery of the Brazilian economy. Our first quarter was one of growth, following a recession. The GDP [Gross Domestic Product] during the second quarter gave us further ground to affirm, with conviction, that the economy is recovering solidly", said Ronaldo Patah, an investment strategist at UBS Wealth Management.

According to Mr. Patah, the stock market is anticipating growth both in terms of company profits and the economy as a whole.

On Monday (11th), economists consulted by the Central Bank raised the 2017 GDP projection from 0.5% to 0.6%. The projection for 2018 is 2.1%. The stock market has also signed off on the reforms and privatizations proposed by the government.

An additional factor that contributed to the rise in optimism had to do with the assessment that things on the political front have stabilized.

After the leniency agreement that had been extended to J&F executives was suspended on Monday, analysts believe that any new charges brought forward by the Prosecutor General's Office against president Michel Temer will not hold water, thus setting the stage to resume discussing the social security reform.

Translated by THOMAS MATHEWSON

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	Walterson Rosa/FramePhoto/Folhapress
	Brazil's President Michel Temer and Finance Minister, Henrique Meirelles