Brazilian stocks fell sharply on Friday as the arrest of the country's former president, Michel Temer, sparked worries that government debate over key fiscal reforms may be delayed.
div > div.group > p:first-child"> The iShares MSCI Brazil ETF dropped 3.9 percent and was headed for its worst day since Feb. 6, when it fell 4.2 percent. The Bovespa index, Brazil's benchmark index, fell about 2 percent after hitting an all-time high earlier this week.
Temer already faced ongoing criminal investigations against him before leaving the presidency. However, his arrest comes as current President Jair Bolsonaro tries to push forward major changes to the country's pension system, which investors largely bet will happen. Brazilian stocks surged to start the year amid hopes the Bolsonaro administration would pass key changes to the country's social security system. Brazil's generous pension system effectively lets citizens retire in their 50s. This has led to massive government debt, which has stymied consistent economic growth in Brazil.
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