Brazilian Stocks Squeezed by Rousseff as Valuations Increase
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Brazilian President Dilma Rousseff’s efforts to improve the lives of her 200 million citizens are coming at the expense of the nation’s biggest companies, causing profits to drop 52 percent, doubling stock market valuations and sending international investors to the exit.
Foreign money managers sold a net $2.6 billion of equities in the past two months, the biggest outflows since Lehman Brothers Holdings Inc.’s collapse in 2008, according to data compiled by BM&FBovespa SA and Bloomberg. The benchmark stock index’s price-earnings ratio jumped to 19 from 9 in September 2011 and reached a 36 percent premium versus the MSCI All-Country World Index, the biggest gap in nine years.