Rio de Janeiro – Although the international crisis has reduced the market value of Brazilian listed companies traded on the São Paulo Stock Exchange (Bovespa) this year, according to a study by consultancy company Economatica, disclosed on Wednesday (28), the president of the Brazilian Association of Listed Companies, Antonio Castro, confirms a more favourable scenery in 2012, albeit not ideal.
In Castro’s evaluation, perspectives are for the economy to grow, but not as much as desired. “Indices for the long run are not what we would have wished,” he said. To Brazilian companies traded on stock markets, expectations are positive, he pointed out. The elimination of the Financial Operations Tax (IOF) on foreign investment is good news. “I hope that it is permanent,” he added.
Another important factor in this direction, according to the Abrasca president, is perception that the benchmark interest rate should continue dropping. “Historically, this very high interest rate makes businessmen only think in the short term.”
Castro considers the initiative for strengthening the fixed income market and the Brazilian Development Bank (BNDES) buying debentures are “one more push towards longer term investment.”
He believes that in case demand grows, the value of companies, calculated by the market, should also evolve. This growth, however, should not occur at a very great speed. “In general, everybody wants to see things with their feet on the ground.”
In the evaluation of the Abrasca president, 2011 was not good for Brazilian listed companies. “This was a very difficult year, with a level of great uncertainty.” Based on Tuesday (27) trading, Economatica calculated losses of Brazilian companies at the Bovespa at over 213.5 billion Brazilian reals (US$ 114.2 billion).
The good news is that in the perception of businessmen, economic growth in 2012 will be greater than this year. Contributing to this notion is the signalling of lower interest rates. Thus, the level of company investment with their own funds should rise. “It will obviously not rise very significantly, but the indices are good, when looking ahead.”
According to research by the organisation in December, 36% of Abrasca associates approached mentioned greater investment with their own funds in 2012, against 16.7% in the January evaluation. In that month, 50% of businessmen forecasted retraction of investment. The figure has now dropped to 16%.
Castro does not doubt that Brazil will continue very attractive to non-speculative foreign investment “European and American growth perspectives are very small. We know that they invest much in Asia.” He mentioned the cases of China and India, where the rate of saving is very high.
In the case of Brazil, high taxing has caused the private sector not to be able to save, he said. “Brazil offers this difficulty and practically everything that the government collects is turned to cost coverage. Little goes to investment. I think that this is the great problem of Brazil: it invests little, and leaves little space for private savings.”
*Translated by Mark Ament
