It has been all over the news for the past days and weeks. Brazil is facing one of the biggest wave of protests it has ever seen over the last decades, with a huge number of people coming out to the streets to show their dissatisfaction with the way Dilma Roussef‘s government has been handling public policies, investments and prices rising. One of the biggest demonstrations occurred this week in Rio de Janeiro, with reportedly 100.000 Brazilians showing up for a peaceful group march, with the main intention of drawing the media attention all over the world as well as to put some pressure onto the Brazilian government. According to BBC, these are in fact the largest protests we’ve seen in Brazilian soil for the past 20 years!
The manifestations broke loose in the beginning of the month, with its epicenter taking place in São Paulo. It happened shortly after the government had announced raising the price of public transportation, with a single bus fare increasing from 3 reals to 3.20 (+6.66%). The Brazilian authorities defended their decision based on the inflation numbers and pointed out that since the last time prices had increased back in January 2011, inflation for that same period had been around 15.5%, clearly figures way over the 6.66% increase.
However, these protests are basically the result of a bunch of factors that have been piling up for years now and the increase in the public transportation price was just the tip of the iceberg in many’s opinions. The investment made on major sports events such as the Brazil 2014 FIFA World Cup or the 2016 Rio Olympics, as well as several cases of corruption that have came to the surface lately, aside with the high taxes being paid for for poor public services in Brazil, are being pointed out by many protesters as the main causes for the Government to have neglected and cut their efforts into improving the health and educational sectors across the country.
Unsurprisingly, this whole phenomenon has already had its effects in the stock markets and a good way to observe them is to precisely track down BOVESPA‘s (São Paulo’s stock exchange) performance over the past few weeks. From June 3 to June 17 (the exact last 2 weeks), this Brazilian stock index has already plunged -9.00% (from 53944.00 to 49089.00), dropping to its lowest value ever since August 2011. The way Brazilian authorities will prove to be capable of handling this situation will most likely determine how well prepared they really are to deal with the bigger challenges that will come ahead. If they succeed to slow down this recent wave of protests, this could be a perfect time to invest and buy low in the BOVESPA stock index…