Latest news with #KineaInvestimentos
The Star
28-07-2025
- Business
- The Star
Brazil investors warn of political impact of US tariffs in election
Unpopular move: Protesters dressed as police, Trump and Bolsonaro demonstrating against the US president's announcement of 50% tariffs on Brazilian goods and against a US report that cited counterfeit product sales in Brazil, in Sao Paulo. — AP SAO PAULO: At a large financial market gathering in Sao Paulo, Donald Trump's threat to impose 50% tariffs on Brazil barely registers as a primary economic concern. What's truly unsettling money managers is the political fallout – the broader storm unleashed by the US president ahead of next year's elections. Since Trump issued the July 9 threat in retaliation for what he called a 'witch hunt' against Jair Bolsonaro, his conservative ally in Brazil, leftist President Luiz Inacio Lula da Silva has seen a boost in popularity that's strengthening his reelection bid. Meanwhile, Bolsonaro's allies have struggled to mount a cohesive and persuasive response. 'The macroeconomic impact is small and the microeconomic risks are already priced in,' Ruy Alves, a partner and manager at Kinea Investimentos, said in an interview last Friday on the sidelines of the event organised by XP Inc. Investors fear that, under Lula, Brazil's finances would continue to deteriorate, with a negative impact on the currency and inflation. That would force the central bank to keep a very restrictive monetary policy in place, creating a vicious cycle that would eventually hit growth. 'The political impact could be big. And it could have an impact on the exchange rate,' Rodrigo Azevedo, co-chief investment officer at Ibiuna Investimentos, said at the same event. The real has so far avoided a major sell-off as double-digit local interest rates add to the appeal of the Brazilian currency against a globally weakening dollar. It has still weakened about 2% since Trump made his threat. Most of those losses came last Friday after Bloomberg News reported that Trump's administration is seeking new legal basis for imposing tariffs on Brazil, given that the country has a trade deficit with the United States. The fact that the Brazilian economy is somewhat closed limits the impact it will sufffer from the tariffs, according to the economists present at the event. XP estimates that a 50% rate would shave no more than half a percentage point off Brazil's growth in 2026. Some Brazilian companies could suffer a severe blow, but that has been largely priced in by markets, according to Alves, from Kinea. The most prominent case is aircraft manufacturer Embraer SA, whose stock price has sank almost 20% since the tariff threat. Yet veteran investor Luis Stuhlberger sounded more sceptical of the positive political effect that US tariffs may have for Lula in the longer term. 'This is just a short-lived gain,' he told the audience. 'Companies will go bankrupt, layoffs will happen, there will be silent defaults, strikes in agribusiness, truck drivers striking. The blame will fall on the government.' — Bloomberg
Bloomberg
17-02-2025
- Business
- Bloomberg
Brazil, Ukraine and Then Chile? EM Traders Bet on Next Rate Hike
After Brazil and Ukraine embarked on interest-rate hiking campaigns last year, investors are betting that the next developing economy to follow suit will be Chile. Money managers from Kinea Investimentos, Ace Capital and Itau Asset Management have all bet on higher swap rates as inflation proves surprisingly stubborn in the Latin American nation and the economy shows signs of life.
