Peaceful demonstration brings relief, but economy worries businessmen

Entrepreneurs from different sectors heard by the Sheet understand that the statements of President Jair Bolsonaro (PL) on September 7, as well as the demonstrations of supporters in different capitals of the country, were as expected and report some relief for not having inflamed supporters to aggressive behavior or to break with the other Powers of the Republic, as in previous speeches.

But the feeling is one of apprehension about the coming weeks, until the elections, scheduled for October 2, as well as the direction of the economy and Brazil’s ability to attract and retain investors.

“The uncertain environment caused by the current president’s coup threat limits investments”, says João Paulo Pacífico, founder of Grupo Gaia, which operates in the financial market. “Foreign investors have a bad image of the country because of Bolsonaro, and they end up avoiding Brazil,” he says.

In the opinion of Pacífico, there is “ignorance” on the part of the private sector regarding the MST (Movimento dos Trabalhadores Rurais Sem Terra), which reflects Bolsonaro’s statements.

“We raise funds in a super serious and diligent way for food cooperatives linked to the movement, but some companies don’t even want to hear what they do”, he says. “It’s a business community that has a certain affinity with the president’s prejudiced and shallow speech.”

Pacifico considered Bolsonaro’s speech about the “imbrochable”, alongside the first lady, Michelle Bolsonaro, “shameful”. “His speech of him showed a fragile, toxic masculinity that tries to engage those uncritically who consider him a ‘myth,'” she said.

“To make the event commemorating the Bicentennial of Independence a rally, according to jurists, is a crime, as is having speeches that encourage non-compliance with law and order,” said Pacífico. “But none of this is new. He’s been doing it since he took office.”

A top auto industry executive, who prefers to remain anonymous, said political instability has greatly increased market volatility this year. But, as the company is a long-term investor in the country, it maintains Brazilian operations.

In the automobile sector, the German Mercedes-Benz announced this week the dismissal of 3,600 workers at its factory in São Bernardo do Campo (SP), with the outsourcing of part of its production. In January last year, Ford announced the end of production in Brazil. In April of this year, Toyota decided to close its factory in São Bernardo do Campo, the first outside Japan.

Adjust to “Polarization Moment”

Paulo Solmucci Júnior, president of Abrasel (Brazilian Association of Bars and Restaurants), says he was “very happy” to learn that the September 7 demonstrations “went without disorder or anything more serious.” He said he had not seen Bolsonaro’s speech.

“I expected a more tense atmosphere, but it seems that we are accepting or better understanding this moment of polarization and adjusting to it,” he said.

For the executive, interest and exchange rates, which in the past reflected market insecurity, are now well-behaved. “Companies are investing and hiring. But there’s a big fuss about what’s being called a labor reform review,” he says. “The spending ceiling has already gone to the swamp in everyone’s speech [os candidatos]we hope that the judgment prevails in the choices of fiscal rearrangement”, he said.

In the opinion of Rafael Cervone, president of Ciesp (Center for Industries of the State of São Paulo), the date of September 7 took shape in an election year, leaving aside its real meaning on several occasions.

“May the next president, whoever is chosen by the people, defend freedom and think about Brazil in the long term, with special care for education and in a climate of peace,” he said.

Igor Morais, president of the streetwear fashion franchise Kings Sneakers, believes that peaceful demonstrations, without “fanaticism”, are a sign of political maturity.

“But the election year influences business, there are positions and promises that can affect the future of the country”, says the businessman who, unlike the other interviewees, does not like the idea of ​​a businessman openly supporting a politician – as in the case of Luciano Hang, owner of the Havan department store chain.

“It looks like you’re supporting to get something in return and I don’t think that’s cool.”

A top executive in the food industry, who prefers to remain anonymous, a supporter of Jair Bolsonaro, said that the electoral environment is only tense because institutions do not fulfill their role – especially the STF (Supreme Federal Court) which, according to him, has been making monocratic decisions, entering the purview of other Powers.

Most companies do not know how to handle the electoral process, says survey

A survey carried out by the Ethos Institute, between June and July of this year, points out that 90% of companies see reputational risks in their involvement with the theme of the electoral process. Among those interviewed, 85% said they did not have an exclusive internal policy to address the issue.

This year, the institute launched a guide to help companies on how to act ethically and responsibly in elections.

For Caio Magri, president of the Ethos Institute –which promotes the concepts of environmental, social and corporate responsibility (ESG) in companies and has 454 members, including Natura, Grupo Pão de Açúcar, Carrefour and Renner–, the participation of entrepreneurs and executives in an electoral process it must be in line with what they want for the country and for the sustainability of their respective companies.

“Whoever is facing the greenhouse effect and investing in reducing the environmental impact of their operations cannot live with a government that has denialist policies”, he says. “Causes need to be supported and, if any candidacy defends this cause, the support of business leaders is natural.”

In Magri’s opinion, the global economic scenario will be increasingly critical, which requires business leaders, government and society to walk together in the same direction, towards sustainable development. “This is the decade of action, we need to act together to collectively arrive at a more resilient perspective that can overcome the simultaneous crises we are experiencing.”

Investors see demonstrations within expectations

The perception of market agents heard by the Sheet is that Bolsonaro’s statements and demonstrations did not bring a new fact with enough weight to cause any more negative impact on asset prices in the Brazilian financial market.

“The novelty is that there was no problem, since many people had the expectation that something would happen this September 7”, says Luiz Fernando Figueiredo, CEO of Mauá Capital.

“I think it’s a reason for the market to be a little calmer at tomorrow’s opening [quinta, 8]”, adds the former director of the BC (Central Bank).

Partner of the manager Adam Capital, André Salgado says that the market is treating the elections in a balanced way, weighing positive and negative aspects of each of the two main candidates that, “in sum, are equivalent”.

“I think the demonstrations can reduce the gap in favor of Bolsonaro, but still with a greater margin for Lula, at least for now”, says Salgado.

“The market has already discussed some type of institutional rupture as a risk. But the perception is that this probability has decreased”, endorses Rafael Ihara, partner and chief economist at Meraki Capital.

Leandro Saliba, a partner at the mining company AF Invest, interprets the statements in a more positive light. He says that the size of the acts should be well received by the market, from the perspective of a more liberal economic conduct in a reelection scenario.

Chief economist at brokerage Necton, André Perfeito, also did not see in the demonstrations anything that could significantly alter investor sentiment in relation to market performance.

“I don’t think we’ll have any big noise, either up or down,” says Perfect. The economist adds that local market movements should continue to be under greater influence of global macroeconomic factors.

The rise of Brazilian stocks abroad comes in the wake of the appreciation of the main American stock exchanges this Wednesday – the S&P 500 advanced 1.83%, the Dow Jones had gains of 1.1.40%, and the Nasdaq rose 2.14% . Petrobras’ ADRs (American Depositary Receipts), which dropped more than 2% at the beginning of this Wednesday’s session, closed with a slight increase of 0.2%.

The prospect of a slowdown in the global economy contributes to a lesser need to raise interest rates, with a horizon that starts to become more favorable for the shares of companies traded on the Stock Exchanges, says the economist at Necton.

A report published this Wednesday by the Federal Reserve (US central bank) known as the Beige Book reinforced this scenario, showing that companies reported some relief from labor shortages and pressures on prices.

“Overall labor market conditions remained tight, although nearly all districts highlighted some improvement in labor availability,” the Fed said in its report analyzing US macroeconomic conditions.

with Reuters