Investors flee state-owned enterprises in election year, with doubts about corporate future

Investors flee state-owned enterprises in election year, with doubts about corporate future

On the eve of the presidential election, Brazilian investment funds show fear regarding state-owned companies. The investments it has made in public companies are now at their lowest level since 2008, with R$36.1 billion in shares of these publicly listed companies. The volume, given the data from mid-August, represents a decrease of 43% compared to the situation at the end of last year and 71% compared to 2019, the pre-pandemic moment and when the historical maximum was reached, with 124 R$. 5 billion.

According to analysts, the lower allocation directly reflects the research that appears Former President Luis Inacio Lula da Silva leadership, at a time when part of Faria Lima began to articulate his preference for a second term in office. Jair Bolsonaro, With the view that his government is pro-market, he left aside criticism about the spending the president is touting in his search for re-election. Before 2019, the peak of investments in state-owned enterprises in 2010, exactly during the Lula government, amounted to R$94.4 billion. In 2008, the year of the bankruptcy of Lehman Brothers and the worst level in the historical chain, total investments in shares of state companies amounted to 30.4 billion R$.

The survey you did TC / Economy Request stadium, covers all state-owned companies listed on the stock exchange, both federal and state-owned: there are 20 companies in total. Figures also consider investments ElectrobrassAnd the It was privatized this year, but Etihad remains the main shareholderAnd the That is, privatization does not explain the decrease in the volume of investments in public companies this year. The reading should also take into account that in addition to the greater or lesser allocation to SOEs in the period, the survey reflects the performance of papers, which in some cases have lost value throughout this year. The study also does not take into account the purchase of foreign funds in the country.

Continue after the announcement

Fund managers consulted by the report say that the election day approaches and read that there are greater opportunities for privatization in a second government. Jair Bolsonaro than in a new period Luiz Inacio Lula da Silva, which has already set itself against the sale of state-owned enterprises. “Today, the market still gives a 60% chance for Lula, a 35% chance for Bolsonaro and 5% for other hypotheses,” comments a source who asked to remain anonymous.

Currently, risk aversion is high, which is reflected in CDS (credit default swap), An address that acts as a kind of insurance for credit operations in the state. Year-to-date, this indicator has already increased by 18%. It recently crossed 300 points, reaching the highest level since April 2020, the worst moment for the pandemic.

Generally in election years, he explains Partner and Finance Analyst at Nord Research, Luiz Felippo, one of the points of relevance to the market relates to a possible change in the leadership of state-owned enterprises, something that could indicate the company’s adoption of strategic policies. “There is some uncertainty about what kind of management a state-owned company can have, and this can make managers more fearful. There are also other companies on the stock exchange at attractive prices, which leads to competition.

Fund managers change portfolio positions in anticipation of elections; Government agencies are currently marginalized. take photo: Daniel Teixeira / Estadao

a Partner and Director of RPS Capital, Gustavo Fabrício, confirms that the political scenario has a significant impact on the stock market, given the approaching date of the elections in October. “We have less than three months to choose the next president of Brazil, and this has a very big impact on what will happen with the state-owned companies. The Bolsonaro government has shown that it is more liberal for these companies, improving productivity and giving prices freedom. Lula’s government, like Dilma and the Workers’ Party, had A more state and price-controlled past, which has caused some state-owned companies to lose out in order to artificially seek to control prices and inflation.For this reason, he explains, the market is choosing not to take risks at this time.

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