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Stock Market Crashes as Uncertainties that Surround President Temer Shake up Investors

05/19/2017 - 13h50

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DANIELLE BRANT
FROM SÃO PAULO

The crisis that has enveloped president Michel Temer - leading to uncertainties regarding the future of the pension and labour reforms - has led Brazilian stock markets to crash after the country registered its 5th worst trading result this century on Thursday (the 18th).

The stock market began to indicate a recovery during the afternoon amid speculation that Michel Temer would resign, but the positive scenario faded in less than an hour.

Shortly after, president Temer delivered a 5-minute announcement stating he would not step down, leading investors to get uneasy and causing the stock market to begin tanking again.

The release of conversations that were recorded between businessman Joesley Batista and Temer, as well as Temer's allies - recordings which were declassified on Thursday night - will most likely cause turbulence in the stock market yet again on Friday, but analysts will not be expecting the same degree of panic that was observed among investors on Thursday.

The collapse that took place just as markets opened Thursday morning led the Brazilian stock market to use its circuit breaker - a first ever since the international economic meltdown of 2008. The mechanism brings trading to a halt for 30 minutes if the Ibovespa goes down by 10%.

At the end of the day, Brazil's stock market went down 8.8%, or 61,597 points. The companies that make up the Brazilian stock exchange lost R$ 219 billion (US$ 65 billion) in terms of market value.

Translated by THOMAS MUELLO

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