PEC boosts retailers’ shares, but analysts see short breath

The retail sector has seen its shares react on the stock exchange in recent days with the movement in Brasília for the vote on the PEC (proposed amendment to the Constitution) that authorizes the government of President Jair Bolsonaro (PL) to commit more than R$ 41 billion to expand and grant benefits less than three months before the elections.

Despite the gain that the measure would provide to trade, analysts believe that the breath would be short and insufficient to take consumer stocks out of the fund. Instead, the sector runs the risk of being further penalized by keeping interest rates at high levels for longer.

While the PEC advanced last week in the Chamber, the most traded shares on the Stock Exchange of the retailers Americanas, Magazine Luiza and Via shot up, respectively, 25%, 20% and 29% until Friday (8), the day after the vote of the text in the plenary has been postponed by the president of the House, Arthur Lira, to this Tuesday (12).

In this interval, there was also a 6% gain in Icon B3, an index that tracks a broad list of companies linked to consumption. The Ibovespa, a benchmark for the stock market, rose only 1.35%.

Despite the positive effect, the movement is far from indicating recovery, according to Lucas Sharau, investment advisor at iHUB.

“PEC is the reason the sector needed to take a breather, but the macroeconomic scenario depreciates the segment with this high interest, which mainly penalizes retail, which depends more on credit to have leverage with the increase in consumption”, says.

Sharau points out that, within a year, Magazine Luiza’s shares sank 88%. “The share dropped from more than R$20 to almost R$2. It would need to go up a lot more to get back to what it was,” he says. The falls in one year of Americanas and Via were 75% and 84%, in that order.

For comparison, the consumer sector index plummeted 43% in the same range, while the Ibovespa dropped 20%.

The mismatch between the increase in government spending and the need to fight inflation is one of the main reasons for the market’s distrust at the moment, according to Ramon Coser, a partner at Valor Investimentos.

“Just like an airplane, the economy has two engines: one of them is monetary policy, the other is fiscal policy. They need to be aligned. In this government, one is accelerating and the other is braking”, he compares.

“What is the monetary policy at the moment? The Central Bank is raising interest rates to contain inflation. It takes time, but it is effective. But the government’s fiscal policy is aimed at heating the economy and it is doing it by transferring income. the other brakes. This is not positive.”

Harmful to the economy under any circumstances, the mistake becomes more worrying in view of the prospect of a slowdown in the world economy in the coming months, according to Nicola Tingas, chief economist at Acrefi (association of credit and financial companies).

The feared effect is a rise in the dollar, due to a combination of risk aversion and a drop in commodity exports, causing more inflation and forcing the Treasury to pay even higher interest rates at the same time that the Union would have to deal with a drop in revenue. .

“But what has given encouragement at the moment for some segments of the Stock Exchange, such as retail, is the possibility of loading an electoral bubble that creates a better environment than the normal reality would bring”, says Tingas.

“The great truth is that when the stimulus ends, when it’s all over, fuel taxes return, there will be more inflation and fiscal risk in a world generating a smaller flow of dollars to Brazil.”

Less pessimistic, economist Denis Medina, professor at FAC-SP (Faculty of Commerce of São Paulo), considers that the effect “concentrated in the second semester” does not cancel out the positive aspect of the PEC in supporting economic recovery.

“As this money goes into people’s hands, it will fall directly into commerce. More than R$40 billion were not expected. This is a point that needs to be considered.”