Political Risk Latin America Blog @PolRiskLatam

Brazil: violence priced into markets

Posted in News and Articles, Political Risk by politicalrisklatam on November 30, 2010

by Vicent Bevins for Financial Times – Beyond Brics, November 30th, 2010.

You might expect that if war broke out on the streets of a country’s second-largest city, streets were littered with burning vehicles, and a thousands-strong military invasion was required to restore a semblance of order, investors could get a bit nervous.

Not so in Brazil, which has been watching in fascinated horror as security forces try to contain violence in Rio de Janeiro, but where markets are carrying on as usual.

Stocks and bonds haven’t been affected. Marcos Duarte, owner of Polo Capital, a hedge fund based in Rio de Janeiro doesn’t think any other investments will be negatively affected, either: “I doubt any entrepreneur would postpone or even cancel any investment in real estate assets or any kind of business up to now. I haven’t heard of any worries of anything like that. Even though the images emerging now can be quite damaging, the situation here has actually improved compared to what we had before.”

“I don’t know if the broader public knew that police forces were blocked from going to some parts of this city. But this is not news for Cariocas [residents of Rio] or even for a large part of the Brazilian population.” He says the issue of favelas and violence were already priced into investments in Rio, which will be a host city for the World Cup in 2014 and host the Olympics in 2016, and if anything, police have recently reclaimed some parts of the city. (continue reading… )



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