The bear is back.

Brazilian stocks officially fell back into bear market territory on Thursday as the relentless sell-off in oil and the country’s ever darkening economic outlook sapped investors’ appetite for Latin America’s largest economy.

The country’s benchmark Bovespa stock index fell 1.2 per cent Thursday, taking its drop from its recent November high to over 20 per cent.

By almost any measure, 2015 was an annus horribilis for Brazil. The country is in the midst of its deepest recession since the Great Depression. A massive corruption scandal at the state-run oil company Petrobras had led to the arrests of some of the country’s top politicians and businessmen. Inflation hit a 13-year high of 10.7 per cent in December, the currency has lost a third of its value against the dollar and the country’s president Dilma Rousseff is facing the possibility of impeachment. To top it all off, Brazil was stripped of its hard-won investment grade rating by both Fitch and Standard & Poor’s.

In this context, it is not surprising then that the Bovespa has been getting little love from investors. The index ended last year down 13 per cent. In dollar terms, the decline is even steeper – at nearly 42 per cent.

2016 has not brought any respite, with the index extending its losses by another 11 per cent since the new year. Underscoring the pressure, there has been only one day so far this year where the Bovespa has managed to close higher.

Market turmoil has already pushed Russia’s dollar-denominated RTS Index into bear market territory this month while the US equity market fell into “correction” territory – defined as a loss of 10 per cent or more from recent highs – yesterday.

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