How can the Brazil effect affect you on investments?

Of course, if there is a hot spot in the equity markets right now, that is undoubtedly Brazil. Because in effect, the events that have been taking place in the Ibero-American country can generate an effect contagion to other geographic areas, among which is included the Spanish, International. In fact, the financial markets of our country are already being affected by the political and social instability that has Brazil as its epicenter. With some companies more sensitive than others, as you will be able to verify from now on.

But what is happening in Brazil specifically? Well, corruption cases are reaching the highest levels of the Rio de Janeiro executive. Where the ungovernability can be the fact in which this scourge is manifested. To the point that if this crisis deepens, it would not be surprising that there are risks of contagion. Especially its most relevant geographical neighbors, among which stands out Argentina. And by extension it can even reach Spanish companies that have a significant presence in this emerging economy.

The situation is reaching levels of such gravity that it is affecting foreign trade, as well as regional economies. With the risk of generating a significant flight of capital in the region. It cannot be forgotten that Brazil is one of the most powerful emerging economies of the world. And any problem in its economy can affect the most powerful in the world. Not surprisingly, this effect has already been transferred to Spanish equities. Worse, it can get worse over the next few months.

Brazil: contagion in the national stock market

One of the repercussions of the Brazilian crisis is that it ends up affecting the national stock market. Because during these weeks its effects have already been present in its main stock market indices. To the point that the Ibex 35 has suffered more intense falls than in the remaining squares of the old continent. Because in effect, the depreciations generated in these days have doubled. Where it can be said that the Spanish stock market is one of those affected by the events that are taking place in the American country.

The cause must be found in the great exposure that some of the national companies that are listed in the reference index have. More than in any other euro zone nation. And this situation is being collected by the financial markets with special objectivity. The problem may be that this problem can extend and that it can even generate serious social conflicts. With the risk that revolts could start among broad layers of society. At the moment there is no hint that these events can be stopped. Which can lead to new and sharp falls in equities.

It cannot be forgotten that the main impact of the Brazilian crisis is political in nature and is affected by the financial volatility generated by this turbulent situation. Not only in equities, but also to currency markets or even to fixed income products, such as bonds or obligations, among some of the most relevant. It can become an instrument of such severity that it can make you earn or lose a lot of money in any of the affected financial markets.

Exhibition of Spanish companies

Such is the importance of these events that uncertainty is already beginning to weigh down the stock market behavior of large Spanish securities such as Banco Santander, Telefónica, Mapfre or Prosegur. Although they are not the only ones, since other classes of companies that are listed in other secondary indices also have interests in the area. And whose volatility may still be greater than those of those. With the obvious risk that significant cuts will be generated in the price of shares.

Among the second-rate companies that are exposed to this turbulent panorama, there are some that in all probability may be the object of your operations on the stock market. Among them, Prosegur, whose sales in this country are close to 20%. But also others to the liking of small and medium investors, such as Amper or Ezentis. That can be immersed in very intense movements in its price. With very relevant differences between its maximum and minimum prices. And in any case, with percentages significantly higher than other values.

How can it affect the values?

The Brazilian crisis can affect these companies very seriously. With corrections above normal in these cases. It cannot even be ruled out that it may reach levels set in the double digits. Faced with this scenario, the most prudent thing to do is refrain from taking positions on these stocks. You have so much more to lose than to gain. The risk is very high and the reality is that it is not worth assuming these uncertainties in your investment portfolio. At least during these moments.

Another aspect that is very interesting is the one referring to the terms of permanence. Because in principle, they affect the operations carried out at short term. Not medium or long. But in any case, you will have the opportunity to buy their shares at the most competitive prices on the market. With what in the densest periods you can generate a much higher performance potential. Conforming as one of the strategies that you can use to benefit from this panorama that has been created in Brazil.

That is why it is not surprising that some financial agents are increasing the positions in the securities most vulnerable to this social crisis. How? Well, very simple, taking advantage of the recent weakness to increase positions. While retail investors are making massive sales so as not to be exposed to further weaknesses in stocks and in this particular financial market.

Reality of the Brazilian economy

The scenario of its economy was one of a certain stabilization, after a long period of recession, although with various economic parameters that show a certain distortion. One of them is referring to a currency weaker than before. And as a consequence of this global scenario, it has fewer resources to cut interest rates. As a tool to develop and promote greater growth in its economy. This can harm a favorable scenario for your interests in the financial markets.

El decline in investments it is another of the dominant notes of the Brazilian economy. With one of the lowest levels in recent years and which is imposed as one of the biggest problems you are facing at the moment. To the extent that it can become one of the most damaging factors in its economy. What's more, it could be another trigger for it to pose a serious threat to this process that this emerging economy is going through.

Guidelines for small investors

So that you cannot see yourself harmed by this delicate situation, you will have no choice but to import a series of performances. They will be very useful to defend your positions and protect you from the most unfavorable scenarios. These are just some of the tips that may matter from now on.

• Do not expose, for the moment, your heritage to values with greater exposure to the interests of the Brazilian economy. It is not the best of times to carry out these operations that can be very dangerous. In addition, you have another series of much more suggestive alternatives.
• If you are going to opt for reverse products, this may be your moment. As for example, through the investment investment funds. Where you bet on bearish positions. Although in any case, under great caution in their movements because they are financial products with greater risk.
• The national stock market is full of values ​​that will not be affected by what may happen in Brazil. Maybe at some point buying positions are clearly imposed on the saleswomen. A whole declaration of interests for the next trading sessions.
• You can't forget that we are close to the holidays and it is a period in which movements in financial markets can intensify. With the risk that the equity markets could depreciate significantly in these months.
• Neighboring financial markets are the most affected in this scenario. Where will it be very risky to take positions, because the risks are innumerable. With a foreseeable drop in their respective stock indices. Surely it will not be worth opting for this risky decision.
• You may be in a position to opt for another kind of alternative investments. They can be very profitable and more especially at this time. They can formalize through an opening of positions in the energy market, raw materials and even in the currency market. The latter will offer you more possibilities than any, but also with greater risk.
• And lastly, you can't forget that this can be a punctual problem. This means that you can return to these values. But with a very important difference and that is that you will do it with more suggestive prices than right now. To the point that it can be a real business opportunity. Think about it from an optimistic vision in the investment world. You may even hit it with a little luck.