SAO PAULO, May 6 (UPI) -- Goldman Sachs said Monday it is recommending that investors reduce exposure in Brazil, citing the surging popularity of a leftist candidate as October presidential elections near.
Goldman recommends that those investing in Latin America shift their money north toward Mexico rather than keep it in Brazil, where Luiz Inacio Lula da Silva of the Workers Party is leading all polls with about 38 percent of the vote.
In particular, the bank noted that exposure should be reduced in utilities, banks and telecoms, many of which are state owned.
Government officials have been harsh in their criticism of U.S. financial institutions and the downgrading of the country's debt last week. Politicians and analysts from all ideological stripes say they institutions should not be meddling in the internal politics of the country.
Brazilian Finance Minister Pedro Malan said last week that Lula's popularity "is a mistaken justification for lowering the debt rating, because these opinion polls will continue coming out for several months. The economy cannot be managed on the research of the previous day."
Lula, who routinely takes protectionist trade stances, particularly for agricultural products, dismissed the recent warnings and downgrading.
"We will make a government that is committed to the needs of the Brazilian people," Lula said last week. "We will not be at the mercy of any bank giving its opinions about Brazil."
Meanwhile, the campaign of the leading market-friendly candidate Jose Serra appears to be losing steam. Serra, the government's handpicked candidate from the Social Democratic Party, is now faced with allegations that he asked for kickbacks totaling $6.2 million during the 1997 privatization of a prominent mining company.
In the latest polls, Serra is second to Lula with about 16 percent of the vote.
