The worsening of Brazil’s fiscal risk led analysts at American bank Morgan Stanley to downgrade the country’s shares. The indicator went from neutral to negative. According to the report sent to the bank’s clients, “interest rates need to fall in Brazil and the market needs to move away from the risks associated with fiscal dominance.”
The analysts also wrote that they will “monitor signs of a change of course by public policymakers that could move the country away from a model of spending and increasing debt to one of investment and falling interest rates.” However, the tone of the statement is more pessimistic, as they speculate that the situation in Brazil could get worse before it gets better.
Regarding the shares of Argentina, Chile and Colombia, Morgan Stanley showed optimism. The ratings of the three countries rose from neutral to positive, confirming the trend of political improvement in the region. “Andean markets are relatively small and shallow, but offer good value and low correlation with the rest of the world,” says the bank’s newsletter.
On Tuesday (19), on the sidelines of the G20 summit, Argentine president Javier Milei met with IMF managing director Kristalina Georgieva, who highlighted her government’s “impressive progress” in “stabilizing the economy and making make it more market-based.” On the social network X, she posted a photo with Milei and said that the IMF is “ready to support Argentina and its people in building these achievements”.
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IMF director meets with Milei and highlights Argentina’s “impressive progress”
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Public debt rises 12 points during the Lula government, predicts IFI