Brazil markets plunge as Temer scandal threatens reforms

A trader works at Mirae Securities in Sao Paulo, Brazil, May 18, 2017.

http://in.reuters.com/article/us-brazil-markets-idINKCN18E31I

Brazilian markets plummeted on Thursday as allegations that President Michel Temer condoned bribes to silence a key witness deflated investor optimism about the prospects for his ambitious pension and labor reform agenda.

Brazil’s benchmark Bovespa stock index .BVSP closed 8.8 percent lower, its biggest daily decline since the 2008 financial crisis. Trading had been halted for an hour after a 10 percent drop triggered a circuit-breaker mechanism.

Blue-chip stocks such as lender Itaú Unibanco Holding SA (ITUB4.SA) and state-controlled oil company Petróleo Brasileiro SA (PETR4.SA) dragged the index lower.

The declines slashed 26 billion reais ($7.7 billion) off the market values of Itaú and Petrobras.

The Sao Paulo stock exchange saw 3.1 million transactions, breaking a previous record set in October 2014, the day former President Dilma Rousseff won a narrow runoff election, according to exchange operator B3 Bolsa Balcão Brasil SA (BVMF3.SA).

Temer was caught on tape encouraging a prominent executive to pay a monthly fee to keep jailed former House Speaker Eduardo Cunha silent in the country’s biggest-ever graft probe, sources said on Wednesday, confirming a report in newspaper O Globo.

“Brazilian stocks and assets and their currency have rallied very strongly up until really today. It’s a big pullback and … it at least brings the risk up to the surface again,” Alliance Bernstein Managing Director of Equity Product Management Eric Sprow said.

The report threatened to torpedo a two-year rally in Brazilian assets as traders quickly reassessed the chances of success for efforts to streamline the country’s social security system and reform labor regulations. As a result, policymakers’ attempts to curtail the growth of public debt and foster economic growth may also be in doubt.

Strategists at JPMorgan Securities and UBS Securities downgraded their recommendations on Brazilian equities to “neutral,” citing increased risks to the implementation of structural reforms.

http://www.bbc.com/news/world-latin-america-39968829

Brazilian President Michel Temer says he will not quit, amid allegations he authorised paying bribes to silence a witness in a huge corruption scandal.

“I will not resign. I know what I have done,” he said in a televised address.

Earlier, the Supreme Court approved an investigation into the allegations, but Mr Temer said he would prove his innocence.

Mr Temer took over office last year after the impeachment of his predecessor, Dilma Rousseff.

O Globo newspaper said Mr Temer had been recorded discussing payments to silence the jailed former Speaker Eduardo Cunha.

The recording is of a conversation between the president and Chairman Joesley Batista of meat giant JBS, made by Mr Batista using a hidden device, O Globo says.

When Mr Batista told Mr Temer he was paying Cunha to remain silent, the president was recorded saying, “You need to keep that up, okay?” the newspaper reported.

It did not say how it obtained the information, or what Mr Cunha was being asked to keep quiet about.

But Mr Temer hit back in his address, saying: “I never authorised any payments for someone to be silent. I did not buy anyone’s silence. I fear no accusations.”

———–

living close to the edge..a brazilian stand off..

“I will not resign. I know what I have done,” he said in a televised address.”

401

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~ by seeker401 on May 22, 2017.

One Response to “Brazil markets plunge as Temer scandal threatens reforms”

  1. Reblogged this on World Peace Forum.

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