In the past few years, Brazil has suffered its worst recession on record, impeached a president, and discovered that an uncomfortably large proportion of its politicians have been implicated in a kickback scandal at state-owned oil giant Petrobras. This is hardly an auspicious backdrop for equities, yet the market has outperformed all its emerging-market counterparts in the past year. It has almost doubled to a six-year high since early 2016.
So is the rally justified, and can it endure? For starters, “the economy has definitely turned a corner and is moving in the right direction” [...]