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Political Crisis in Brazil: Contagion Risk Limited


President Temer took office less than one year ago after the impeachment of Dilma Rousseff; his popularity rating is very low, as he has been trying to push through some unpopular reforms in order to rein in the nation’s depleted public finances that have been badly damaged by two years of recession. The current political turmoil could shift the focus from pension reforms to elections, with an outcome of no pension reform being implemented. We have taken a more cautious stance towards Brazilian debt on the back of recent events, but expect the crisis to be contained domestically.

Multi-asset themes

Reflation Trade Under Pressure, but Fundamentals still Supportive

The reflation narrative is still alive even though we are reaching a more mature phase. The Eurozone and Japan are in an earlier stage and should benefit from a more benign fiscal and monetary stance. The outlook for Emerging Markets is also improving, led by India and China. The improving global outlook supports a positive view on equities globally, with DMs and Europe in particular favoured vs EMs. Bonds remain exposed to rising rates and therefore require a flexible approach to manage rates sensitivity and search for opportunities across sectors and maturities.


Pioneer Investments funded Asian equity mandate with Afore XXI Banorte, MEXICO.
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