Brazil & Argentina sell-offs should be seen in context

Financial markets in Brazil sold off yesterday following the decision by a Senate Committee to reject the government’s labour reform bill, while the stock market in Argentina has dropped today after the surprise decision by MSCI not to upgrade it to the Emerging Markets Index. However, both sell-offs should be seen in context – financial conditions in Brazil remain much looser than they were during the 2016 political crisis, while Argentine equities are still up by 20% year-to-date.