World's Worst Stock Market Doesn't Look So Bad in Reais

  • Selloff in Brazil's real sends stocks tumbling in dollar terms
  • For investors measuring returns in reais, index down just 1.9%

With Brazil’s real leading losses among major global currencies, international investors in the Ibovespa are feeling the pinch even as stocks hold up in local-currency terms.

The stock gauge has plunged 26 percent this year in dollar terms, the most among the world’s biggest equity markets. That compares with a 1.9 percent decline in reais.

“The massive selloff of the real is making the Ibovespa look a lot cheaper in dollars,” Luis Gustavo Pereira, an analyst at brokerage firm Guide Investimentos, said by phone from Sao Paulo. “That currency volatility is pushing investors away from stocks.”

Brazilian equities have tumbled from their 2015 peak in May as President Dilma Rousseff grapples with forecasts for the worst recession in 25 years amid impeachment talks and a widening graft probe at the state-controlled oil producer. The stock gauge had entered a bull market in April, after rallying more than 20 percent from this year’s low, on speculation that government measures would shore up the budget and avert a credit-rating cut to junk.

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