In the excerpt of the sixth paragraph “However, there are
signs things are being turned around” the word in bold can be
replaced, without meaning change, by
Leia o texto para responder a questão.
Patience is needed for Brazil to come good again
Michael Hasenstab
Dr. Michael Hasenstab is executive
vice-president, portfolio manager
and chief investment officer of
Templeton Global Macro
The Olympic Games in Rio drew global interest to Brazil,
but the country and the rest of South America has been in
sharp focus for investors all year. They have flocked to the
region as part of a broader migration into emerging market
debt, following record low valuations and the hunt for yield in
a low interest rate environment. While investors have been
presented with a rarely seen buying opportunity in emerging
markets like South America, it is a mistake to regard these
countries as a homogenous group.
That leaves the challenge of working out which are
the most attractive opportunities – some of our best known
investments were not obvious choices.
We have devised a formula to help us evaluate the
fundamental strength of different emerging market countries.
It scores a country’s current and projected strength on five
factors: how well it has learnt the lessons from past crises; the
quality of its policy mix; the structural reform being undertaken
to boost productivity; the level of domestic demand; and its
ability to resist external shocks. The aim is to pick nations that
are fundamentally strong but, for one reason or another, are
out of favour with investors. It can take time for the market to
catch up to reality. But if you are a long-term investor – and
we are certainly in that camp – you have the luxury of being
able to wait.
Brazil, for example, is known as a vulnerable market due
to the commodities downturn, the ongoing corruption crisis
and ensuing political turmoil, but our work suggests to us that
it is poised for a potentially significant rebound in the long
term. Its current score is low, but its projected future score
tells a different story.
We believe the country has learnt the lessons from the
most recent crisis, which brought home the importance of
having a sustainable fiscal policy. It has already adopted a
flexible exchange rate, has strong foreign exchange reserves
and has limited short-term debt. This is also reflected in the
country’s improving resilience to external shocks, with a
reliance on commodities, at 60 per cent of exports, being the
largest remaining negative.
It is perhaps no surprise, given Brazil’s deep recession and
political instability, that there is much work required in terms of
improving policy mix, making structural reforms and boosting
domestic demand. However, there are signs things are being
turned around, with monetary policy already being tightened
aggressively to bring inflation expectations back under
control, and the previously excessive levels of governmentsubsidised lending being cut. Once political stability returns,
the government will be empowered to do even more.
Work on structural reform should accelerate too, as Brazil’s
middle class has made it clear it wants greater transparency
and an economic policy framework that can both boost living
standards and improve the environment for businesses.
(www.ft.com. 01.09.2016. Adaptado)
Leia o texto para responder a questão.
Patience is needed for Brazil to come good again
Michael Hasenstab
Dr. Michael Hasenstab is executive
vice-president, portfolio manager
and chief investment officer of
Templeton Global Macro
The Olympic Games in Rio drew global interest to Brazil, but the country and the rest of South America has been in sharp focus for investors all year. They have flocked to the region as part of a broader migration into emerging market debt, following record low valuations and the hunt for yield in a low interest rate environment. While investors have been presented with a rarely seen buying opportunity in emerging markets like South America, it is a mistake to regard these countries as a homogenous group.
That leaves the challenge of working out which are the most attractive opportunities – some of our best known investments were not obvious choices.
We have devised a formula to help us evaluate the fundamental strength of different emerging market countries. It scores a country’s current and projected strength on five factors: how well it has learnt the lessons from past crises; the quality of its policy mix; the structural reform being undertaken to boost productivity; the level of domestic demand; and its ability to resist external shocks. The aim is to pick nations that are fundamentally strong but, for one reason or another, are out of favour with investors. It can take time for the market to catch up to reality. But if you are a long-term investor – and we are certainly in that camp – you have the luxury of being able to wait.
Brazil, for example, is known as a vulnerable market due to the commodities downturn, the ongoing corruption crisis and ensuing political turmoil, but our work suggests to us that it is poised for a potentially significant rebound in the long term. Its current score is low, but its projected future score tells a different story.
We believe the country has learnt the lessons from the most recent crisis, which brought home the importance of having a sustainable fiscal policy. It has already adopted a flexible exchange rate, has strong foreign exchange reserves and has limited short-term debt. This is also reflected in the country’s improving resilience to external shocks, with a reliance on commodities, at 60 per cent of exports, being the largest remaining negative.
It is perhaps no surprise, given Brazil’s deep recession and political instability, that there is much work required in terms of improving policy mix, making structural reforms and boosting domestic demand. However, there are signs things are being turned around, with monetary policy already being tightened aggressively to bring inflation expectations back under control, and the previously excessive levels of governmentsubsidised lending being cut. Once political stability returns, the government will be empowered to do even more.
Work on structural reform should accelerate too, as Brazil’s middle class has made it clear it wants greater transparency and an economic policy framework that can both boost living standards and improve the environment for businesses.
(www.ft.com. 01.09.2016. Adaptado)
