Brazil Volatility Index

Foreign investors are stepping up withdrawals from Brazilian equities and currency positions ahead of October's presidential election, pressuring the Ibovespa and the real to weaker levels. Market economists quoted describe the outflow as an exit likely to persist at least until the vote is decided, with sellers gone but no buyers stepping in at better prices.

Canadian firm BCA Research cut its recommendation on Brazilian assets to sell across the board, sparing only credit default swaps. Its analysts argue the central bank, with a board largely appointed by President Lula, is easing monetary policy on the eve of the election despite expansionary fiscal policy and is too optimistic about Brazil's inflation problem.

Bloomberg report carried by The Star: the Brazilian real slid about 1%, leading emerging-market currency losses, while the Ibovespa tumbled 2.5% in its worst session since March as election anxiety took hold of traders. JPMorgan downgraded Brazilian equities to neutral, citing expected volatility around the race between President Lula and challenger Flavio Bolsonaro.