Gabriel Burin, Noe Torres

BUENOS AIRE/MEXICO CITY(Reuters) – Brazilian stock prices will fall less this year than expected due to concerns over the October presidential vote. In addition, double-digit rates of interest and a lowered outlook on the second half of the year make it difficult for investors to switch from savings accounts.

Brazil’s benchmark stock indicator has lost the majority of its first quarter gains. The pressure from intensified political rhetoric and the effects of the central banking’s ultra-hawkish efforts to curb inflation have caused the index’s decline. The index is up 5.2% compared to the end of 2021.

According to the median forecast from 15 strategists polled between May 12-24, it is projected to increase 6.0% to 117,000 point by 2022, up from 110,345 on Monday. This estimate is below the 125,000 point end-2022 forecast, which was returned in the February survey.

Kairos Capital partner Andre Leite said, “We will be facing brutal election times. High interest rates are with you for the foreseeable future and we have sticky inflation everywhere around the world.”

The atmosphere in Brazil has been sourened by warnings about similar disturbances to those experienced at the U.S. Capitol Riot 2021 and the political instability caused by worries over election transparency five months ago.

Last week, a group of legal professionals and lawyers stated that Brazil’s democracy is under attack from President Jair Bolsonaro. He claims that the electoral system can be manipulated fraudulently.

Concerns have been raised about his attacks on Brazil’s judiciary system and Brazil’s electronic vote system. He may also refuse to accept defeat in October, a race where he trails former President LuizInacio Lula Da Silva.

Brazilian stocks performed better than U.S. equity in the quarter’s first quarter, as commodities exports from Latin America’s largest economy were indirect beneficiaries of global trade disruptions caused by Russia’s invasion.

However, investors are leaving Bovespa’s volatile stock index to invest in more secure bank accounts that will allow them to benefit from Brazil’s lofty rates of 12.75%. This rate is among the highest anywhere in the globe.

In Mexico, the S&P/BMV is forecast to gain 11.7% to 57,400 points by year-end, from 51,376 on Monday. It was higher than what the previous survey had predicted at 57.050 points by the close in 2022.

Gerardo Copca director of MetAnalisis stated that “We remain optimistic”, local earnings are continuing to recover from the effects of the coronavirus panademic, and Mexico’s currency stability continues favor foreign investors.”

The Mexican stock market is virtually flat in 2022.

(Alternative stories in the Reuters global stock market poll package:

Additional polling and reporting done by Noe Torres, Mexico City. Editing by Jan Harvey