Brazil Has More Downside Risk Than Upside

The impeachment of Brazilian President Dilma Rousseff has thrown the country’s equity market into a frenzy. The Brazilian stock market has been very correlated to its political disturbances. The South American economy is also highly dependent on commodity prices, which are not doing great these days. In a report, UBS analysts caution investors not to chase the rally in Brazil as fundamentals are still weak. The report says that the market is currently more exposed to risks, whereas probability of an up cycle is lower. Equity earnings will be affected by weak credit in Brazil Credit growth in Brazil is expected…