Brazil is top destination for Chinese investment, expensive energy threatens British pubs and what matters in the market

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Brazil is the main destination for Chinese investment

With investments in startups, infrastructure and the Brazilian oil sector, the investments of Chinese companies in Brazil more than tripled in 2021 and returned to the pre-pandemic level.

The country was the main destination for Chinese capital last year, with a share of 13.6% of the total.

In numbers: were $5.9 billion in 2021, value 208% higher than 2020 in nominal terms, a year of decline due to the pandemic, and the highest in four years. Worldwide, the rise was just 3.6% last year.

The numbers, which do not consider inflation, are from the Brazil-China Business Council.

Highlights: most of the money (85%) went to oil, especially for the co-participation agreement in the Búzios field, in the pre-salt layer of the Santos Basin.

• Only Tencent, owner of WeChat in China, has put money into the unicorns Nubank, QuintoAndar, Carregando.com and startups Cora and Omie.

• MSA Capital made investments in Nubank and in foodtechs Cayena and Favo, while Ant Financial, a fintech from Alibaba, bought 5% of Dotz.

Other highlights are the acquisition of the Mercedes-Benz plant in Iracemápolis (SP) by Great Wall Motors and the privatization auction of CEEE-T, an energy company in Rio Grande do Sul.

Who wins and who loses in the VA/VR MP

The provisional measure that changes food and meal voucher rules has until Friday (2) to be sanctioned, but it displeased part of the worker benefit companies, which ask for a veto from President Jair Bolsonaro (PL) to some articles of the proposal.

Understand the most controversial points:

Withdrawal after 60 days: is the most criticized topic by companies. The bill says that the balance not used for 60 days can be withdrawn in cash by the worker.

• The controversy: the companies claim that the article distorts the meaning of the MP, since in this case the worker could use the resource to buy anything and not just food.

Portability: the worker will be able to choose the card through which he will receive benefits from May 1, 2023.

• the controversy: here there is a division between traditional companies and newcomers. ABBT, which has Sodexo, Alelo and Ticket among its members, says that the rule creates difficulties for employers and that the lack of regulation brings legal risks.

• iFood, which entered the market two years ago, says the measure will put decision-making power in the hands of the worker, but also advocates regulation. Fintech Caju says that the lack of regulation can harm the sector.

Open payment: the worker can use the card in restaurants that are not accredited by his flag, as long as they accept a voucher.

• The controversy: traditional operators are against it and claim that it will not be possible to guarantee the quality of the restaurant chain. The younger ones are in favor and say that there will be more competition and easier use of the benefit.

Other PM changes: the text prohibits VA companies from giving discounts to employers who hire the service for their employees. The measure also prohibits expenses that are not for the purchase of food, in the case of alcoholic beverages, for example.

British pub drama

The energy crisis that has driven up costs across Europe is now threatening the survival of a British tradition: pubs.

The alert comes from six of the country’s biggest breweries, which have called for “immediate government intervention” in high energy bills, whose value has increased by 300% for some owners.

What explains: the origin of the energy crisis lies in the war in Ukraine, which limited the supply of Russian gas to Europe and sent prices soaring. The gas is used there in various sectors of the economy and also to heat homes.

• Some pub owners report spending more on energy than on rent, at a time when the number of pubs in England and Wales is at its lowest level since at least 2005 – it was 39,970 in June.

• To make matters worse, the largest producer of carbon dioxide (CO2) has announced that it will reduce production because of costs. The gas is used in the manufacture of beers.

Summer of Discontent: we have already shown how energy-driven inflation resulted in a wave of strikes across the country. The shutdowns are likened to the “winter of discontent” in the late 1970s and will be a challenge for the next prime minister.

Relief: This Tuesday, the EU (European Union) reached its winter gas storage target two months ahead of schedule, announced Ursula Von Der Leyen, President of the European Commission.

• The average on the continent reached 80%, allaying fears of a shortage in winter, a period in which homes use the input the most.

The ‘astral hell’ of the IRB

Reinsurer IRB shares plummeted 7.52% this Tuesday, at R$1.72, amid a tide of negative news that has affected the company’s shares since the beginning of 2020.

The current drop is due to an issue of new IRB shares for the company to raise on the market BRL 1.2 billion and adapt to a regulatory requirement of Susep (Superintendence of Private Insurance).

Understand: to reach the desired amount, the company announced on August 24 the initial offer of up to 597 million shares to the market. Considering the closing price on that day (R$ 2.01), the accounts closed at R$ 1.2 billion.

• But the IRB also informed that the amount can be increased by up to 200%or nearly 1.2 billion shares, depending on investor demand.

• Analysts calculated this scenario and realized that it would amount to an offering of 1.8 billion shares to raise R$ 1.2 billion, bringing the quotation value to BRL 0.66.

Investors then increased their “short” position in the company – when they bet on the stock’s fall -, and the shares have already fallen about 12.5% ​​since the offer was announced. In the year, they sink 56%.

From darling to shunned: between May 2018 and February 2020, when a report by the manager Squadra accused the company of making up the balance sheet numbers, IRB shares had soared 200%.

• Amid doubts about the company’s numbers, still in 2020, a speech from the board with analysts suggested that Berkshire Hathaway, Warren Buffett’s fund, would have started investing in the company, which increased the shares at the time.

• Shortly thereafter, Berkshire was curt and blunt in saying that it never was and would not have intended to be a shareholder in the IRB.