The Petrobas corruption scandal has already likely cost Brazil’s suspended president Dilma Rousseff her job, but with six out of ten Brazilian congress members facing some kind of criminal investigation it’s difficult to see how everything will entirely play out.
Nonetheless, the prospects of imminent government change have prompted investors to start to place major bets that the Brazilian economy could be set to outperform dramatically. Brazil’s IBOVESPA index (Brazil 60 on IG) has been one of the best performing stock indices in 2016, gaining over 18% year-to-date. The Brazilian index saw a massive rally in February and has continued to find very solid support at the 48,000 level. There’s a very good chance that the Brazilian market will end 2016 as one of the best performing markets in the world.