Financial market reacts with strong aversion and insecurity after Bolsonaro’s intervention to change the command of the state-owned company
The Brazilian financial market operates with strong aversion and uncertainty this Monday, 22, after the president Jair Bolsonaro (without party) determine the change of command in Petrobras last Friday, 19, and signal that further changes are expected to occur this week. Around 11:10 am, the Ibovespa, the main index of Brazilian Stock Exchange, decreased 5.5%, to 111,917 points. As expected, the drop is led by Petrobras shares, with a 21% meltdown for preferred (PETR4) and common (PETR3) shares. Fear of a shift in economic policy extends losses to other companies with government participation. Central Bank shares (BBAS3) fell 10%, while Eletrobras (ELET3) fell almost 7%. Investors’ insecurity with Brazil risk also drives the dollar. The US currency advanced 2.3%, to R $ 5.509. At the maximum, the currency reached R $ 5,533, while the minimum did not exceed R $ 5,502. The dollar closed last week with an increase of 1%, to R $ 5.385.
“It is worth remembering that, since the beginning of the year, several events started to indicate an increase in the risks of political interference in Brazilian companies, mainly in state-owned companies: the almost resignation by the government of the CEO of Banco do Brasil, André Brandão, the resignation of the CEO from Eletrobras, Wilson Ferreira Junior, and his statements below indicating that the privatization of the state-owned company was not in the plans, and the increase in noise at Petrobras in relation to its pricing policy, ”says Betina Roxo, chief strategist at Rico Investimentos. “The perception of higher risk, in the midst of the already existing concern about the fiscal situation in Brazil and also potential additional pressure if foreign investors leave the country again may lead to the Ibovespa’s fall,” he says.
The intervention in the presidency of Petrobras and the risk of a turn in Brazilian economic policy monopolize the attention of investors this beginning of the week. Bolsonaro announced on Friday, after the market closed, the choice of general Joaquim Silva and Luna to replace Roberto Castello Branco as president of Petrobras and as the company’s Board of Directors. The exchange took place amid increased tensions between the president and the state company after the announcement of new readjustments in gasoline and diesel, published on Thursday, 18. “The government decided to appoint Mr. Joaquim Silva and Luna to fulfill a new Mission, as Board Member and President of Petrobras, after the end of the Cycle, over two years, of the current President, Mr. Roberto Castello Branco ”, informed the President in a document posted on his social networks.
On Saturday, 20, the pressure increased when he affirmed that new changes should occur in the state-owned company in the coming days. If the press is concerned about yesterday’s exchange, next week we will have more ”, he said during a speech at a military event in the city of Campinas, in the interior of São Paulo. Moments later, in a video published on social networks, the president reiterated that the request for changes in the state-owned company are not interferences and made a series of criticisms of Castello Branco and the Petrobras board. “Did you know that since March last year, the president of Petrobras has been at home, as well as all of his board?”, Asked the president, “You can’t govern, be in charge of a state-owned company, like this. Wrong things happen. The new president, if approved by the board, I hope it will be approved by the board, will give a new dynamic to Petrobras. ” Bolsonaro also stated that the value of gasoline could be 15% cheaper if the inspection bodies “were working”, before citing Petrobras, the Ministry of Mines and Energy, the Federal Revenue Service, “which has to do with invoices, and don’t see ”, and Inmetro. “These are other bodies that no one has ever bothered to do anything about. When there is an increase in fuel, people aim and shoot the President of the Republic. This will start to change, it started to change. We have to remove who is in front of Petrobras, ”he said.