Contrary to what everyone imagined, the Ibovespa has detached itself from the international markets and has already surpassed 8% of appreciation in the year until this last Thursday. However, this rise is supported by practically ten stocks.
The Ibovespa is an index formed by 92 stocks, but only 89 companies. This is because some companies have more than one share class.
For example, Petrobras has PN-type shares, called preferred, and ON-type, called common. The latter are the shares with voting rights.
The index appreciation on any given day can be estimated by the product of a share’s participation in the index and its respective variation on that day.
Thus, the appreciation of just over 8% of the Ibovespa can be estimated by the product of the peso by the variation of each respective share.
Making this calculation, we found that ten shares account for the entire appreciation of the Ibovespa. These ten shares represent almost half of the Ibovespa, considering their weights.
The table above presents these ten stocks, their weights in the index, returns and their respective contributions to the appreciation of the Ibovespa.
The other 82 stocks, weighted by their weights, contribute virtually no returns.
If we disregarded these 10 stocks in the table, and weighted the Ibovespa again with just the remaining 82 stocks, the index would rise by less than 1% in 2022.
Considering the total number of Ibovespa shares, 36% of them depreciate this year and 73% of the shares have a return below the index. In other words, this year’s rise was not spread across all stocks.
As can be seen in the table above, practically three sectors focus attention: financial, oil and mining. Only one company outside these sectors stands out, which is Intermédica.
Although Itausa does not only have Itaú Unibanco as a subsidiary, Alpagartas, of which it is also the parent company, is the highlight of the decline, with a devaluation of more than 27% in 2022.
This concentration is explained by the strong inflow of foreign investors. They prefer to buy liquid companies, as they can also easily exit if the scenario changes.
Let’s hope that the stronger-than-expected rise in US interest rates doesn’t scare away these investors, or the Ibovespa could take the path of the rest of the stock market.
Michael Viriato is an investment advisor and founding partner of Investor’s House
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I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
