“Brazil’s Supreme Court announced Tuesday that corruption investigations have been ordered for eight ministers and dozens more top politicians in a sweeping decision that affects almost one third of President Michel Temer’s Cabinet and many of his top allies,” according to ABC News. “In total, 108 people will be investigated following Justice Edson Fachin’s ruling, which was itself the product of more than 74 probes involving plea bargain deals and testimony from former and current executives with Odebrecht, a construction giant at the center of a bribes-for-contracts scandal.”
The corruption investigation comes as Brazil is trying to regain to its investment-grade credit rating. A potential catalyst for EWZ and Brazilian stocks is the country’s effort to regain its investment-grade credit rating. President Michel Temer is trying to restore confidence in the country’s finances after losing its investment-grade rating in 2015.
Investigating Temer’s cabinet could weigh on Brazilian equities going forward because he was Rousseff’s replacement and Brazilian stocks rallied in anticipation of Rousseff being booted for tolerance. Investors’ tolerance for ongoing political corruption and volatility in Latin America’s largest economy could be wearing thin.
“The politicians have all denied any wrongdoing. Temer has temporary immunity from prosecution because Brazilian presidents can only be charged for crimes they committed during their term in office,” reports ABC.
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