President of B3: ‘Brazil is cheap. Lost relevance among emerging countries’ – 04/14/2022

Gilson Finkelsztain, president of B3, the Brazilian Stock Exchange, said, in an interview with Veja magazine, that the country is “very cheap” and, in recent years, “has lost relevance even among emerging markets”.

The statement was made when asked whether the movement of foreign investors to enter the Brazilian stock market should last or is it a matter of opportunism to buy cheap shares. For him, the movement can continue for quite some time.

The truth is that Brazil was and still is very cheap, through the combination of attractively priced shares and a depreciated exchange rate. In recent years, the country has lost relevance even among emerging countries. Foreign investors are looking for strong growth in these countries, and given our low growth, they have left Brazil in the background. But, with the cheap stock market and the current search for protection against inflation through assets such as banks and commodities, Brazil has once again attracted international flows. The outlook is positive, but it is worth remembering that foreign investors seek stability and growth. We need to do our homework to keep this flow going. Gilson Finkelsztainpresident of B3, in an interview with Veja magazine

Production engineer who made a career in the financial market, Finkelsztain, 49, also spoke about his expectations for this year’s elections. According to him, the election “always brings uncertainty”, but he believes that the pre-candidates presented so far are well known.

“We are already schooled in this matter. We have gone through several experiences of political transitions. Today, there is a certain maturity that, if done carefully, these changes do not affect the stability of the market. I believe that we will have some volatility, but nobody expects there to be some kind of rupture or dramatic change in the Brazilian scenario”, he says.

Regarding the “boom” in the number of investors and the arrival of more young people on the stock exchange during the period of the covid-19 pandemic, the president of B3 cites a “combination of very positive structural changes”, among them the fact that the generation born in the 1990s “they are more willing to study the market and are more likely to take risks, unlike the previous generation, which lived with an economic scenario of extremely high inflation and interest rates”.

He says he still doesn’t believe that inflation and higher interest rates will put an end to the good phase and make people turn to fixed income products. “Today, investors are more mature, unlike ten to twenty years ago, when they were attached only to fixed income products. Equity has gained space in portfolios, as well as other products. Brazil and it will not go back to what it used to be.”

Asked about the risk of interference by President Jair Bolsonaro (PL) for Petrobras, whose performance has a strong impact on the Ibovespa, and, consequently, on the performance of the stock exchange, he said that governance was good for the state-owned company, which is controlled by the state. , but has private shareholders.

“Perhaps, if we didn’t have all the evolution of the governance discussion that Petrobras has gone through in the last four years, as well as the State-Owned Companies Law, the company would be being used as a political instrument at this moment. In the current situation, Petrobras demonstrates that it’s okay to have a mixed capital company listed on the stock exchange, as long as the controlling shareholder understands that having partners means treating them with respect, without using the company as if it were 100% government”, he says.

On a resumption of IPOs at B3, Finkelsztain says this year will be a little tighter due to inflation adjustments, higher interest rates and lower growth. “With the normalization of conditions, these companies should resume their movement to go public. Of course, not all of them will reach this point, but if we analyze the investment industry in Brazil, less than 15% of assets are allocated to stocks. As the economy normalizes, the search for good assets and good equity opportunities will resume.”

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