Opinion – Marcos de Vasconcellos: A peek at the real economy, before the end of the year

The World Cup is over. At least for us. And before the year ends —and Bolsonaro and Paulo Guedes yield their seats to Lula and Fernando Haddad—, it’s good to take a peek at the real economy, to adjust our expectations and “bets”.

We’ve already talked about how investments in private securities in emerging economies are the next big thing for large international banks and asset managers. And since the Brazilian economy has room to ride this wave, attracting foreign money from those willing to take a little more risk in search of gains.

The risk premium has increased (more risk, more return, as long as you hit the target, as we wrote here). As the official appointment of Haddad, this Friday (9), had little impact on the Ibovespa, we can imagine that the Exchange’s “risk x return” ratio was already more or less calibrated in relation to changes in the Planalto. It remains to know the risk in relation to economic reality.

The stock exchange, let’s face it, went out of fashion this year, when we look at the real economy. The number of companies seeking money in the stock market plummeted. Until the November count, we only had 17 IPOs (initial stock offerings) and follow-ons (stock offerings by companies that already have papers circulating). Last year, there were 72. In 2020, 53. And the year before, 42.

This just shows how the connection between the Exchange and companies has weakened this year. As long as we have high interest rates, it must remain difficult to find news there. As I heard from an executive who made a hundreds of millions IPO in 2021: “The window of opportunity to raise money was there in 2021. We knew it was too early for our company to enter the market, but when the next opportunity came, it would be too late too much”.

So instead of looking for big news, it’s time to outline possible scenarios to foresee how the companies that are already on the Stock Exchange today will react, as well as those that will probably issue fixed income securities in the coming months, to raise money for their projects.

It should be remembered that the largest companies on the Stock Exchange, apart from banks, are companies such as Vale (VALE3), Petrobras (PETR4 and PETR3), Ambev (ABEV3), JBS (JBSS3) and Klabin (KLBN3).

A good lens to try to look at the future of companies of this size comes from the CNI (National Confederation of Industry). On the 2nd, the CNI released its latest industrial indicators bulletin for October. What appears there is a Brazil whose manufacturing industry remains at the highest level in history in terms of real revenue.

Industrial employment is also close to record highs, rising again in October after declines in August and September. Compared to October 2021, the increase is 1%. While the average income of workers in the sector had the fifth consecutive monthly increase, rising 7.6% compared to last year.

At the same time, the use of installed capacity (how much machines and conveyor belts are occupied) is sustained at a higher level than that practiced before the pandemic, with values ​​above 80% since March 2021.

In summary: the real economy sends good signs for the new year to come, possibly still little shaken by the announced political changes, which have been playing with our Ibovespa like a cat with a ball of yarn.