Brazil Stocks Fluctuate as Political Concerns Offset GDP Reportby
Bradesco CEO Trabuco, two managers face allegations in Brazil
Brazil’s economy shrinks less than forecast in first quarter
Brazilian stocks fluctuated amid speculation that restoring confidence in Latin America’s largest economy will be a hard task as a graft investigation unfolds.
The Ibovespa was little changed after posting the world’s biggest tumble in May as accusations in an investigation into alleged tax fraud were made against Banco Bradesco SA Chief Executive Officer Luiz Carlos Trabuco Cappi and two other company executives. The action adds to a separate corruption investigation that started at the state-run oil producer and contributed to a political and economic crisis that led to the suspension of President Dilma Rousseff. While a government report released Wednesday showed the economy contracted less than forecast, concern that Acting President Michel Temer won’t be able to quickly revive growth weighed on the market.
“There’s certainly a political risk that may curb the speed of any eventual measures,” said Raphael Figueredo, an analyst at brokerage Clear Corretora in Sao Paulo. “The economic numbers were better than expected, but there’s still a lot to be done.”
Until recently, traders had piled into Brazilian assets this year on speculation that a change in the administration would be able to revive an economy facing its worst recession in a century and shore up the budget. Improving fiscal accounts is key for the government after the country lost its investment-grade credit rating last year.
The Ibovespa rose 0.2 percent to 48,561.99 at 11:11 a.m. in Sao Paulo, after earlier sinking as much as 0.6 percent.