Despite IBOVESPA’s significant decreases over the past month, the Brazilian index reached a 0.5% increase to 17,283 points on Thursday afternoon, August 19 th . Regardless of the poor performance of the Ibovespa, established technology companies such as TOTVS and Locaweb (LWSA3) have significantly outperformed the index with an aggressive M&A strategy. ESG focused companies such as Ambipar have also surfed the global trend and have surpassed the index.
As for the financial despite relative alignment from the larger banks, B3 stock is down over 10% in the last 30 days, contributing negatively to the index. Similarly, the commodities sector has suffered losses, most significantly Vale, reflecting the Chinese authorities’ intention to control iron ore prices at the port of Dalian.
The index still relies heavily on commodities, with Vale and Petrobras being the third largest companies - a very different picture to the S&P 500 which is dominated by tech companies.
Furthermore, the Brazilian inflation index (IPCA) has been significantly over target in the last few readings, leading the central bank to increase the base rate (Selic) at the fastest pace in the last 5 years with the rate expected to reach over 7% by the end of the year from only 2% in January, which has also contributed to the index’s underperformance.
Written by: Bruna Zarzur
Edited by: Anna Kissajikian