Mercado reacted with strong insecurity after Bolsonaro’s intervention in command of the state-owned company; dollar closes at R $ 5.45
The Brazilian financial market operated with strong aversion and uncertainty on 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. THE Ibovespa, the main index of Brazilian Stock Exchange, closed with a fall of 4.87%, to 112,667 points. As expected, the decline is led by Petrobras shares, with a 20.5% drop in ordinary shares (PETR3) and 21.5% in preferred shares (PETR4). Investors’ insecurity with the Brazil risk also boosted the dollar. The US currency closed up 1.2%, to R $ 5.453. The currency reached a maximum of R $ 5.533, while the minimum did not exceed R $ 5.432. The dollar closed last week with an increase of 1%, to R $ 5.385.
Economist Pablo Spyer analyzed the effects felt by the market after government interference in command of Petrobras. “Obviously the interference fell badly to the ears of international investors, the market is concerned. Today, just at the opening of the trading session, Petrobras is falling 20% and the stock market 5.5%. The interferences attract apprehension because they take us back to the moments when the governments intervened in the state companies, in the prices and, even, in the interests. Bolsonaro’s decision raises the nerves of the market and brings nervousness, but it can be an opportunity to buy shares, you can’t know the future. We still have to wait and analyze Silva and Luna’s presidency to draw conclusions, ”he said. While some entities recommend the sale of shares in view of the risk generated by Bolsonaro’s movement, others see an opportunity for investors to buy stocks low with the prospect of new appreciation in the long run.
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-owned company after the announcement of new readjustments in gasoline and diesel, published on Thursday, 18. The resignation was followed by a series of criticisms and new threats Bolsonaro’s. This Monday, the president brought up the subject again, saying that Petrobras has a single bias in favoring a small group. On Saturday, he said further changes would take place this week and criticized Castello Branco’s management. 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.
Still in the domestic scenario, the financial market adopted a more pessimistic tone for the Brazilian economy by reducing the projection of the Gross Domestic Product (GDP), and revise upward expectations for the dollar, inflation e Selic rate in 2021. According to figures released by the Focus Bulletin this Monday, 22, economists and entities consulted by the Central Bank estimate that economic activity will grow 3.29% this year, compared to a projection of 3.43% last week, and 3.49% a month ago. At the same time, the sources of the monetary authority see room for further inflationary pressure. The estimate for the Broad Consumer Price Index (IPCA), the official indicator of Brazilian inflation, is 3.82%. This is the seventh upward revision followed. In the previous publication, the forecast was 3.62%, while a month ago it registered an increase of 3.5%. The new value is above the center of the 3.75% target pursued by the national monetary authority, with a margin to fluctuate between 2.25% and 5.25%. The Focus Bulletin also revealed a new increase in Selic, the main instrument of the central bank for controlling inflation. The expectation is that the basic interest rate of the Brazilian economy will end the year at 4%, above the 3.75% forecast a week ago, and 3.5% a month ago. The sources heard by the Central Bank are also more cautious with the exchange rate, expected to advance to R $ 5.05 in 2021, compared to an estimate of R $ 5.01 last week, and R $ 5 a month ago.