BRAZIL/UK - Fund managers are losing confidence in Latin American's stocks amid concerns a socialist candidate in Brazil's presidential election will gain power.
Threadneedle Investments believes Brazilian stocks will fall – with a knock-on negative effect on other Latin American markets – if Working Party candidate Luiz Inacio daSilva is elected.
Fund manager Paul Murray-John said: “There is some concern that daSilva will remove the current governor of the central bank and put up barriers and tariffs on imports to protect local industry.
“It is a typically unorthodox response to economic problems.”
He added: “DaSilva has told the market that his party policy has changed and he is more market friendly.
“But there is concern among investors that this is just an electoral strategy and deep down he is still very left wing.”
Threadneedle is holding on to stocks it has in Latin American markets, but warned that if daSilva makes the second round of the presidential election, it will re-evaluate its position.
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