2018 was, to say the very least, intense for companies and investors in the US market. It all started with the expectations of the Tax Reform signed in December 2017 — which, by the way, was very well received by financial market investors and executives in general, as demonstrated in the positive rally of US companies’ shares up to the third quarter of the year and in the historical profits posted by US large corporations.
Next, we got anxious about the tensions between the United States and North Korea. Fortunately, in the end everything calmed down and the economy kept going strong.
In the second half of the year, the talks on trade agreements intensified — and some of them had a positive impact on the US economy, such as the new policies under NAFTA, while others (more specifically the agreement with China) are bringing even more high-voltage tensions to the market.
Although unemployment has reached historical minimum rates, with the Federal Reserve System (FED) insisting on increasing interest rates, experts already consider that the economy is beginning to show signs of slowing down at the end of 2018. Now, when we stop and analyze the international scenario, we see a stagnant Europe and China trying to recover the growth rates of yesteryear. What remains as an alternative?
Brazil. Ah, it’s always Brazil! The country of the future has everything in its hands to finally emerge on the international economic stage, but sometimes there are problems during takeoff. After severe turmoil in politics and a high stakes election that resulted in a turn to the right, the country is in a strong upward trend towards greater openness to foreign capital starting next year. Barriers to entry markets once with limitations on foreign capital, such as the financial and commercial aviation ones, have begun to fall. The foreign investor is hungry for good return opportunities and should look no further than Brazil.
We look forward to 2019 and wish it turns out to be Brazil’s year.
By Michel de Amorim, partner of Drummond Advisors