Public companies lose BRL 15.4 billion in the 1st week of Lula

Companies with federal government participation listed on the Stock Exchange lost BRL 15.4 billion in market value in the first week of President Luiz Inácio Lula da Silva’s (PT) government. Of this total, almost R$ 12.7 billion correspond to the devaluation of Petrobras.

The result does not surprise the market, according to analysts, and reflects the expectation of investors that the return to shareholders tends to be lower with a management that intends to intensify the participation of state-owned companies in its public policies.

When considering the period between October 21 and this Friday (6), the devaluation of companies with federal participation rises to R$ 227.66 billion, according to a survey by Einar Rivero, from the TradeMap platform.

At the time, with one week left until the second round of the presidential elections, polls of voting intentions showed that Jair Bolsonaro (PL) had reduced the distance to Lula. The state-owned oil company reached a market value of R$520 billion that day, the highest in history. This Friday, the company ended the session worth R$333 billion, that is, R$187 billion less.

Also on October 21, the Ibovespa, the Stock Exchange’s reference, reached an accumulated annual increase of 14.4%.

The losses that occurred from then on reduced the annual result of the Ibovespa to an increase of 4.69% at the end of 2022, below the estimated inflation of 5.62% for the period.

In the first week of 2023, the main indicator of the Brazilian stock market fell by 0.70%.

“The government has not presented a clear speech, with the exception that it will stop all privatization processes. This has an impact on the market, in general, but mainly on state-owned companies”, says Gabriel Meira, a specialist at Valor Investimentos.

“It is nothing very different from what the market already expected from a Lula government, but it is clear that investors end up discounting their dissatisfactions in public companies and in the Ibovespa, in general”, he says.

Still in the first half of December, the approval by the Chamber of Deputies of a project amending the State-Owned Companies Law to reduce to 30 days the quarantine of nominees to occupy positions of president and director of public companies already confirmed a more interventionist government, according to Ricardo Hammoud , professor of macroeconomics at Ibmec-SP.

“Political criteria will be very important for decisions and this indicates a worsening [nos resultados] of the state-owned companies, because they will be instruments, given that the government has a tight budget and will need them”, comments Hammoud. “They will be more focused on the execution of public policies than on profits.”

Hammoud points out that this is not an exclusive feature of PT management. “It is a historical question in Brazil, which has been happening since the military governments”, he says.

For the professor, although the Bolsonaro government made “absurd electoral use” of public companies such as Petrobras and Banco do Brasil “to win votes”, the market read these movements of the previous administration as being specific.

Now, with President Lula himself declaring that state-owned companies are included in the government’s strategy and, with changes in the sector’s legislation, Hammoud says that the expectation is that political participation will be intensified. “The market realized that it was more difficult to use state-owned companies for political purposes and, now, the ties seem to be looser.”