What do the recent political shifts in Brazil and Mexico mean for markets?

latin america amlo bolsonaro mexico brazil
Mexico’s AMLO (left) and Brazil’s Bolsonaro

Brazil to the far-right, Mexico to the left. At first glance, this is the most evident political shift Latin America’s largest economies opted for in 2018 when they elected, respectively, Jair Bolsonaro and Andrés Manuel López Obrador. The political rupture also brings a new economic dawn for both countries and naturally, financial markets have reacted to it. While the new administrations in each country have only just begun, moves in asset pricing suggest a shift in how investors perceive each country — with gleaming perspectives for Brazil and gloomy ones for Mexico.

“Regarding Brazil, there is hope about what needs to...

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