Ibovespa takes off abroad and closes 2.4% at its lowest level since June after disappointment in politics

SÃO PAULO – Ibovespa took off from abroad and closed with a sharp drop on Monday (28), reaching its lowest level since June after the government published the financing proposal for the Citizen Income program.

The solution was to restrict the amount destined to the payment of precautions by the Federal Government, the idea is to establish a limit of 2% of current net income to pay precautions and add the rest to the amount already provided for Bolsa Família.

In the 2021 Annual Budget Bill, the government allocated R $ 34.8 billion for the program, an increase of 18% compared to the amounts planned for this year.

According to an analysis by XP Politics, the change in the constitutional text to allow the financing of the Citizen’s Income with the refinancing of precautionary payments is possible through the Proposed Amendment to the Constitution (PEC), but there may be resistance from the Court Federal Supreme Court (STF) supported by principles of validity of judicial determinations and legal uncertainty.

Today, Economy Minister Paulo Guedes said that Brazil is a country that needs to generate massive jobs and pointed out that the decision to pay the exemption from payroll tax has not yet been made.

“We continue to study this chapter particularly in tax reform,” he said. “We have our proposal practically ready and now it is politics that gives the synchronization. “Guedes also argued that the Citizen Income will respect the spending ceiling.

The market hoped that there was already a consensus to deliver the second part of the tax reform.

In the midst of so many political uncertainties, the Ibovespa closed with a fall of 2.41% to 94,666 points with a financial volume of R $ 27,342 billion.

It was the index’s lowest closing level since June 26, when the benchmark index closed the session at 93,834 points. It was also the biggest daily drop on the Ibovespa since September 10, the day the stock fell 2.43%.

The movement here has been completely separated from the international indices. European stock exchanges rallied, driven by banks, recovering after collapsing last week amid a scandal that revealed an international consortium of journalists who were neglecting anti-money laundering practices and allowed the transfer of 2 trillion euros. dollars of suspicious origins. .

Among global financial institutions, HSBC was the most attracted to purchases today after insurer China Ping An announced that it will increase its stake in the bank. HSBC shares soared 10.22% on the London Stock Exchange.

The exterior was also encouraged by signs of acceleration in the resumption of the Chinese economy, with growth in the profits of industrial companies. Over the weekend, China’s National Bureau of Statistics reported that local industry profits grew 19.1% in August.

Profits by China’s industrial companies have grown in part driven by the recovery in prices of raw materials and equipment manufacturing, the statistics agency said on Sunday. China’s recovery has been gaining momentum as stifled demand, government stimulus, and surprisingly resilient exports fuel the recovery.

In the United States, the biggest highlight was high-tech companies, which posted another day of highs after falling sharply for several sessions in the previous three weeks. US investors monitor the negotiations between Democrats and Republicans for the stimulus package against the economic impacts of the coronavirus.

The Speaker of the US House of Representatives, Nancy Pelosi, of the Democratic Party, said there is a possibility that she and Treasury Secretary Steven Mnuchin will reach an agreement before the presidential election on November 3.

Also in the United States, a New York Times report notes that US President Donald Trump paid only $ 750 in US income taxes between 2016 and 2017. Trump responded that the story is “completely false.”

The Dow Jones, S&P 500 and Nasdaq indices rose 1.51%, 1.61% and 1.87% respectively.

Meanwhile, the commercial dollar rose 1.48% to R $ 5,635 in the purchase and R $ 5,636 in the sale. The US dollar maturing in October registered gains of 1.22%, to R $ 5,631 in the Secondary market.

In the future interest market, the ID of January 2022 rose 23 basis points to 3.07%, the ID of January 2023 advanced 34 basis points to 4.57%, the ID of January 2025 rose 41 basis points in 6.62% and the ID of January 2027 registered a strong positive variation from 42 basis points to 7.62%.

Among the indicators, the median of financial market economists’ projections for Gross Domestic Product (GDP) in 2020 fluctuated from a 5.05% drop last week to a 5.04% retraction this week, the Bank’s Focus Report showed. . Central. For 2021, the forecast continues to grow by 3.5% of GDP.

In relation to the National Broad Consumer Price Index (IPCA), the projections rose from 1.99% to 2.05% in 2020. The expectation for 2021 was 3.01%.

The forecast for the dollar at the end of the year remained at R $ 5.25 and by the end of 2021 it also continued at R $ 5.00.

Finally, the estimates for the basic interest rate, Selic, remained at 2.00% per year for 2020 and 2.50% per year for 2021.

The news that the state governments have launched an articulation with the National Congress to include in the tax reform two billion dollars of compensation for the states and municipalities is noteworthy.

The strategy is to try to overcome the resistance of the economic team to these transfers, which would add up to R $ 485 billion in ten years, according to The state of São Paulo.

Ordinance of Aras

One piece of news that had an impact over the weekend was the payment of a bonus to lawyers who accumulate more than one letter. In a message sent on September 14 to all members of the Federal Public Ministry, Attorney General Augusto Aras said that he had signed an ordinance that establishes the criteria for prosecutors to receive a benefit for the accumulation of functions.

According to the Status, the amount stipulated for the bonus is one third of the salary of R $ 33.6 thousand set for the entry positions of lawyers in the agency. If adopted, the bonus can increase the number of MPF members who receive the benefit up to 70% of the total.

The senators received the endorsement of Paulo Guedes for a third phase of the National Program to Support Micro and Small Enterprises (Pronampe), designed to help small businesses during the COVID-19 crisis. According to Estadão, the financing program will have another R $ 10 billion this year. Despite this, congressmen linked to the sector are asking for more and want the program to be permanent.

Another highlight today should be the meeting of President Bolsonaro with the Minister of the General Secretariat of the Presidency of the Republic, Jorge Oliveira. According to CNN Brazil, they will talk about the vacancy in the Supreme Court (STF) opened by the departure of Minister Celso de Mello.

The anticipation of the court dean’s retirement was a possibility, but the president did not believe it would happen, according to attendees heard by the CNN. The president returned to Brasilia this Saturday after an operation in São Paulo.

In addition, yesterday the electoral campaign for the positions of mayor, deputy mayor and councilor began. Candidates are free to solicit votes and make proposals known on the streets, on the Internet, and in the written press. The free radio and television advertising of the first round, scheduled for November 15, will run from October 9 to November 12, according to Brazil Agency.

Corporate radar

In corporate news, S&P Global Ratings downgraded Invepar’s ratings, while BR Distribuidora decided to pay dividends on September 30. CCR recorded a 2.8% increase in total traffic on its highways between September 18 and 24 of this year, compared to the same period last year.

Higher highs

Higher number of casualties

Engie Brasil reported that the subsidiary Usina Termelétrica Pampa Sul requested the registration of a public offering for the distribution of 582 thousand simple debentures, which will total R $ 582 million. In addition, the privatization auction of the electricity company CEB Distribuição (CEB-D), responsible for the supply in the Federal District, must have a minimum price of R $ 1.42 billion for all the shares of the company.

(Com Reuters e Bloomberg)

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