Rousseff's win in Brazil raises questions about EM reforms

martes 28 de octubre de 2014 13:54 GYT

* Brazil vote seen blow to pace of reform elsewhere

* India, Indonesia vulnerable to investor doubts

* Policymakers balancing needs of investors, voters

By Sujata Rao

LONDON, Oct 28 (Reuters) - Pledges of reform in emerging markets have encouraged investors this year, but Brazil's vote against any change at the top of its government is raising questions over whether the reforms will be delivered in hyped-up markets like India and Indonesia.

Leftist Dilma Rousseff won re-election as Brazil's president by a slim margin over business favourite Aecio Neves. Her Workers' Party is credited with lifting 40 million Brazilians out of poverty, but investors want to see bold pro-business measures to reverse the country's deepening economic funk.

Brazil illustrates the challenges of the developing world. As economic growth and foreign investment slow, many countries are being pressed to cut deficits, ditch handouts and privatise - popular measures with investors, but fiercely opposed by poor voters who rely on subsidised food and fuel.

Markets showed their disappointment with the election result. Brazil's currency, the real, suffered its worst selloff in a decade. Shares of Brazilian companies, some of the biggest in emerging markets, fell 5 to 10 percent on Monday, wiping $20 billion off the Bovespa index.

The Brazil outcome may well dispel the perception that many emerging governments are lining up aggressive economic reforms, says Bhanu Baweja, the head of emerging markets strategy at UBS.   Continuación...