Brazil’s EWZ ETF falls 5% and Petrobras ADR plummets 14% on the pre-market of the New York Stock Exchange

SÃO PAULO – The EWZ, the main Brazilian ETF listed on the US market, which tracks the MSCI Brazil index, registered a fall of around 5% in the pre-market of the New York Stock Exchange this Monday (22). At 7 a.m. (Brasilia time), the drop was 5.24%, amid the government’s announcement to change the CEO of Petrobras (PETR3; PETR4) and still indicate intervention in the electricity sector. Petrobras PBR shares (equivalent to ordinary shares) had a drop of more than 14% at the same time: the drop was 14.13%, to US $ 8.63.

After the government’s nomination of General Joaquim Silva e Luna for the presidency of Petrobras, replacing Roberto Castello Branco, the perception of risk for Petrobras shares, which was already high due to Jair Bolsonaro’s criticism of the fuel readjustment and to the director general of the state. property, rose further, prompting ADRs (stock receipts, in practice, US-traded stocks) to drop more than 9% in the aftermarket on Friday after recording a drop of more than 7%. % in the regular trading session. The EWZ, the main Brazilian ETF listed on the US market, which tracks the MSCI Brazil index, had already fallen 3.64% in the secondary market on Friday.

Added to this are more statements by President Bolsonaro that may affect other actions. In a conversation with supporters on Saturday (20), after saying that he decided to dismiss Roberto Castello Branco because the readjustments in fuel prices this year were “cowardly”, the president promised to act also in the electricity market. “We are going to put our finger on electricity, which is also another problem,” he said, which could also affect the roles of Eletrobras (ELET3; ELET6).

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XP downgrades recommendation for sale of Petrobras shares after announcement of change of command

After the appointment of General Silva and Luna, XP Investimentos downgraded the recommendation of Petrobras shares from neutral on Sunday (21). The target price was reduced from R $ 32 to R $ 24, both for common and preferred shares. In the report, analysts Gabriel Francisco and Maira Maldonado justify that the change of command puts Petrobras’ independence and the fuel price policy in line with international price references at risk.

“Although we cannot draw preliminary conclusions on whether Petrobras’ pricing policy will change under the eventual management of Messrs. Silva and Luna, what matters is the message that is being transmitted to the market: it is becoming increasingly difficult from the from a political point of view, for Petrobras to implement a policy in which fuel prices vary according to changes in the exchange rate and the prices of a barrel of oil (especially in the case of diesel, given the pressure of the truckers category) ” XP analysts said.

Luiz Fernando Figueiredo, partner at Mauá Capital and former director of the Central Bank, says that the combo between the change of command at Petrobras and the mention of electricity companies should lead all state-owned companies to “suffer a lot.” “Public companies always have a discount, because they are always subject to what happened at Petrobras. But the discount will increase because now it is no longer just a doubt, in practice there was a firm political interference in a public company. Now, does this go to the others or not? Apparently, the president said that he will not be alone in Petrobras, ”he says. See more reviews by clicking here.

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