Government makes ‘preposterous statements’ and pushes the private sector away, says manager Verde

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The first signs of the government of Luiz Inácio Lula da Silva (PT) for the economy were not well received by investors.

The Stock Exchange closed the first week of the year in a fall, while future interest rates rose in relation to the end of December, even with the recovery of markets in recent days.

Among fund managers, the beginning of the government was also viewed negatively, which led to changes in investment strategies to adapt to the new projected scenario.

For one of the main asset managers in the local market, Verde Asset, owned by Luis Stuhlberger, the Lula government has made “outlandish statements” and has helped to drive away private sector investments in the country.

“The new government seems to adopt a modus operandi that recalls the phrase of Azeredo Silveira always quoted by Elio Gaspari [colunista da Folha] —”there are people who cross the street to slip on the banana peel that is on the other sidewalk”— with absolutely outrageous statements on the most varied topics, but especially those related to the economy”, says the manager with about R$ 30 billion, in a letter published this Friday (6) referring to the performance of the Verde fund.

In the document, the manager says that the country’s fiscal situation inspires care and caution, but that “outbursts from several ministers undermine the confidence that the private sector needs to invest and help the country to grow.”

According to Verde, Lula repeats a formula that was already tested in the government of former president Dilma Rousseff and that “knownly led to a disaster”, only in a situation “substantially worse” than in 2010.

The manager also says that the government is in its infancy, which makes it difficult for the market to distinguish “signal noise”, but that, over the next few months, the main interlocutors will be identified and monitored more closely.

The manager also says that the global context remains quite favorable, with the “surprising” speed of reopening in China bringing improvement to commodity prices, and with signs of weakening inflation in the US reducing the risk of a more aggressive stance by central banks in interest rate hikes.

It’s a favorable backdrop for emerging markets, “which only reinforces the view of the huge opportunity that is being wasted by all the additional noise and risk premium generated by the new government.”

In the letter, Verde says that it maintained exposure on the Brazilian stock exchange, and one that gains from the fall in American shares.

The manager also works with a position that gains from the rise in inflation projections embedded in securities traded on the local market, and in gold and oil.

Green Fund reverses 1.1% drop in 2021 with 15.9% increase in 2022

The well-known Green fund closed 2022 with a positive return of 15.9%, against a positive return of 12.3% on the CDI and 4.7% on the Ibovespa.

Having started activities in 1997, the fund had ended 2021 down 1.1%, only the second in its history (the first was in 2008, the year of the real estate crisis in the US, when it fell 6.4%).

Since the beginning of activities, in January 1997, the Fundo Verde has accumulated a return of 21,336%, against 2,625% of the CDI.

According to the manager, bets on interest rate hikes in the United States and Europe and on the appreciation of oil were among the main contributions to the 2022 result.

On the negative side, the equity portfolio in Brazil was the fund’s relevant detractor in the year — the portfolio dedicated to equities fell 5.5% last year.

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