Between surprise and caution, Faria Lima digests Lula’s victory

Investment fund managers oscillate between surprise with the positive reaction of the market this Monday (31), after the victory of Luiz Inácio Lula da Silva (PT) against Jair Bolsonaro (PL), and caution until it is possible to have a better idea of ​​what the economic policy will actually be adopted from 2023 onwards.

According to Rafael Ihara, chief economist at Meraki Capital, there was a negative expectation from local investors, mainly because of concerns about the direction of state-owned companies, such as Petrobras and Banco do Brasil, and the lack of clarity in fiscal policy.

“But foreigners seem to be less concerned about this and started buying. It is impressive how well local assets are performing today”, says Ihara, adding that the market is still waiting for the name that will lead the Ministry of Economy, which he considers to be the biggest concern of investors at the moment. “Nominations from SOEs will also be important, but they must come later.”

The economist also says that the second biggest concern is what will be the size of spending above the ceiling next year, but that the market should only be clear about this dimension in early 2023, when the new government takes over.

The balance of forces, with a more right-wing Congress and an independent Central Bank, greatly reduces the new government’s room for maneuver. Therefore, apart from Petrobras and Banco do Brasil, which should suffer direct interference, the rest of the market has a normal day, says Luiz Fernando Alves, manager of Versa Fundos de Investimento.

“The market is showing today that it has no side, and awaits the announcements of the economic team and government plans with the usual pragmatism”, says Alves.

The Versa manager also says that now it remains to be seen how the new government will balance the balance of public accounts with the maintenance of Auxílio Brasil and the desire for investments in infrastructure indicated by the PT campaign.

“If it is not a balanced equation, which leads to an increase in inflation or the risk premium, the BC will take interest rates to the moon and end the economy. Therefore, the government does not have much choice.”

Founding partner and manager of GTI Administração de Recursos, André Gordon says he should continue in a kind of waiting compass in the coming weeks, until it is possible to have greater clarity on what the new government’s economic policy will be.

Until then, shares that may be more impacted by decisions in Brasília, such as those of Petrobras, should remain in the manager’s fund portfolios, given the good operating moment the company is in, but in a smaller size than in the past. last few months, says Gordon. It is an adjustment not because of the company’s fundamentals, but because of risk management, which increased with the PT victory, he says.

Gordon also says that at this time he will privilege shares of companies that are less susceptible to political news, with the performance more tied to the individual business strategies of each one. Footwear company Vulcabras and commodity producers Suzano, JBS and Vale are cited as examples, as they are more vulnerable to a risk of an abrupt slowdown in the global economy in the coming months and not so much with Brazil, says the manager.

“Apparently, the market believes that Lula will bring someone like [Henrique] Meirelles, but I don’t believe it’s anyone along those lines. If it were, Lula would have already given a signal earlier”, says the manager of the GTI. On the other hand, he continues, he also says that he does not expect that the command of the Economy will be delegated to political figures such as, for example, Aloizio Mercadante.

“I think it tends to be someone with a profile like that of [Fernando] Haddad, eventually having in the team names like Marcos Lisboa.”

In a report, the chief economist at XP and former municipal secretary of Finance in São Paulo, Caio Megale, says that the names of the economic team, as well as the structure of the ministries, are the main points of attention that should most influence performance. of the markets at first.

“After the formation of the team, the next challenge will be to change the current constitutional ceiling to allow greater expenses. times during the campaign”, points out Megale.

As the ceiling change requires a constitutional amendment, negotiations with Congress need to start as soon as possible, says XP’s chief economist. “This means that, this time, Lula needs to assemble the economic team faster than usual. Maybe even this week.”

Economic reforms — particularly tax reform — and what the model for infrastructure concessions for the private sector will be, will also be on investors’ radar going forward, says Megale.

The Toro Investimentos team, on the other hand, indicates that the maintenance of Auxílio Brasil of R$ 600, and the possibility of additional income distribution measures, such as the change in the income tax exemption range, can benefit shares of less sensitive consumer companies. to the external scenario on the Stock Exchange.

As examples, they cite the pharmaceutical company Pague Menos and the retailers Grupo Mateus and Assaí Atacadista.

“The expectation of greater availability of income, among the lower social classes, should also positively impact other retail companies in general, such as Magazine Luiza, Lojas Renner and Americanas, in addition to shopping center companies, such as Aliansce Sonae.”