Even after Brazil outperformed almost all other major markets this year, analysts and fund managers say there’s still room for further gains if suspended President Dilma Rousseff is impeached in coming weeks.
Rousseff’s permanent ouster would clear the way for acting President Michel Temer to get on with the fiscal reforms investors have been pushing for. The Senate voted early Wednesday to put Rousseff on trial for allegedly breaking budget laws, and legislators say a final ballot could come as early as this month.
After taking over in May, Temer has yet to drive through any major policy proposals amid concern that painful spending cuts or unpopular reforms could weaken Senate support for his administration ahead of the impeachment vote. His economic team is expected to propose changes to social-security laws immediately after the ruling, and support for that and other measures will be an important indicator of whether Brazil’s world-beating currency, bond and stock rallies have staying power.