Latin Finance - September/October 2014 - 2

SEPTEMBER/
OCTOBER
2014
FRONT NOTES

EDITOR-IN-CHIEF Taimur Ahmad
NEWS EDITOR Katie Llanos-Small
FEATURES EDITOR Dominic O'Neill
SENIOR REPORTER Eduardo García
REPORTER Karen Schwartz
CONTRIBUTORS Ivan Castano, Lucy Conger,
Jason Mitchell, Thierry Ogier, Phil Thornton
ART DIRECTOR Rosa Matamoros-Sense
COVER ILLUSTRATION Fredrik Broden
CARTOON ILLUSTRATION Christopher Weyant

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High stakes
Betting on a pro-market turn has long been a perilous game for investors in countries like Argentina
and Venezuela. Now, growing speculation of a possible shift to economic pragmatism in these countries
comes as the same question is being asked of Brazil.
Compared to Argentina and Venezuela, Brazil retains an importance for the international capital
markets that is much more in line with the size of its GDP. For investment banks, Brazil is still the biggest market in Latin America, by some distance. But increased doubt about the direction of economic
policy in Brazil over the past four years has meant others - including Mexico, Colombia and Peru -
have begun to catch up.
Following the presidential election in October, investors in Brazil have hopes for a change in
economic leadership. They are keen to see policies that might revive an economy where growth has
slowed to almost nothing on a per capita basis, and where inflation is around 6.5%.
The bullish view is that after the election in Brazil, whoever wins will tighten spending while moving
to eliminate price controls on things like gasoline, electricity and public transport, and reducing the
dominance of state banks.
Whether all this will indeed happen after October, and what effect it will have, is hard to predict.
By late August, polls still showed the incumbent president, Dilma Rousseff, as the favorite in the first
round of voting, with Marina Silva, who took over as the socialist party's candidate after the sudden
death of Eduardo Campos, having the edge in a run-off. A pre-election bet on a policy turnaround in
Brazil could be just as ill-advised as a bet on the governments of Argentina and Venezuela embarking
on more pragmatic policy choices.
Public-sector insiders in Brazil are unrepentant about the statist direction in which the economy has
headed. That might indicate a lack of political will within the state to make adjustments. In addition,
the country has a greater ability to stave off market pressure, even if higher interest rates in the US
bring a sharp reduction in portfolio capital inflows, thanks to the central bank's large stash of reserves.
Meanwhile, if a new or returning government does make changes that could lead to lower inflation
and raise growth over the longer term, those measures may have the opposite effect in the short run.
No one can predict with certainty how long it would take for the economy to recover.
So far this year, the lack of
clarity has given strategic and
portfolio investors little incentive to deploy capital in Brazil.
As a result, there is a sense of
a country on hold: hopes exist
for a rebound in mergers,
acquisitions and equity sales
after the election, but there is
no guarantee.
In that environment,
countries like Mexico and
Colombia look more attractive. And for the brave, even
the risk-reward dynamic in
Argentina might seem more
favorable. LF

2 L ATINFINA NCE.COM - September/October 2014

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Latin Finance - September/October 2014

Table of Contents for the Digital Edition of Latin Finance - September/October 2014

Table of Contents
Latin Finance - September/October 2014 - Cover1
Latin Finance - September/October 2014 - Cover2
Latin Finance - September/October 2014 - Table of Contents
Latin Finance - September/October 2014 - 2
Latin Finance - September/October 2014 - 3
Latin Finance - September/October 2014 - 4
Latin Finance - September/October 2014 - 5
Latin Finance - September/October 2014 - 6
Latin Finance - September/October 2014 - 7
Latin Finance - September/October 2014 - 8
Latin Finance - September/October 2014 - 9
Latin Finance - September/October 2014 - 10
Latin Finance - September/October 2014 - 11
Latin Finance - September/October 2014 - 12
Latin Finance - September/October 2014 - 13
Latin Finance - September/October 2014 - 14
Latin Finance - September/October 2014 - 15
Latin Finance - September/October 2014 - 16
Latin Finance - September/October 2014 - 17
Latin Finance - September/October 2014 - 18
Latin Finance - September/October 2014 - 19
Latin Finance - September/October 2014 - 20
Latin Finance - September/October 2014 - 21
Latin Finance - September/October 2014 - 22
Latin Finance - September/October 2014 - 23
Latin Finance - September/October 2014 - 24
Latin Finance - September/October 2014 - 25
Latin Finance - September/October 2014 - 26
Latin Finance - September/October 2014 - 27
Latin Finance - September/October 2014 - 28
Latin Finance - September/October 2014 - 29
Latin Finance - September/October 2014 - 30
Latin Finance - September/October 2014 - 31
Latin Finance - September/October 2014 - 32
Latin Finance - September/October 2014 - 33
Latin Finance - September/October 2014 - 34
Latin Finance - September/October 2014 - 35
Latin Finance - September/October 2014 - 36
Latin Finance - September/October 2014 - 37
Latin Finance - September/October 2014 - 38
Latin Finance - September/October 2014 - 39
Latin Finance - September/October 2014 - 40
Latin Finance - September/October 2014 - 41
Latin Finance - September/October 2014 - 42
Latin Finance - September/October 2014 - 43
Latin Finance - September/October 2014 - 44
Latin Finance - September/October 2014 - 45
Latin Finance - September/October 2014 - 46
Latin Finance - September/October 2014 - 47
Latin Finance - September/October 2014 - 48
Latin Finance - September/October 2014 - 49
Latin Finance - September/October 2014 - 50
Latin Finance - September/October 2014 - 51
Latin Finance - September/October 2014 - 52
Latin Finance - September/October 2014 - 53
Latin Finance - September/October 2014 - 54
Latin Finance - September/October 2014 - 55
Latin Finance - September/October 2014 - 56
Latin Finance - September/October 2014 - 57
Latin Finance - September/October 2014 - 58
Latin Finance - September/October 2014 - 59
Latin Finance - September/October 2014 - 60
Latin Finance - September/October 2014 - 61
Latin Finance - September/October 2014 - 62
Latin Finance - September/October 2014 - 63
Latin Finance - September/October 2014 - 64
Latin Finance - September/October 2014 - 65
Latin Finance - September/October 2014 - 66
Latin Finance - September/October 2014 - 67
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Latin Finance - September/October 2014 - 69
Latin Finance - September/October 2014 - 70
Latin Finance - September/October 2014 - 71
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Latin Finance - September/October 2014 - 73
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Latin Finance - September/October 2014 - 76
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Latin Finance - September/October 2014 - 79
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Latin Finance - September/October 2014 - 81
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Latin Finance - September/October 2014 - 100
Latin Finance - September/October 2014 - Cover3
Latin Finance - September/October 2014 - Cover4
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