Wednesday, February 24, 2021

Petrobras shares tumble, Bolsonaro unmoved


Petrobras shares melted like snow in the sun on the Sao Paulo Stock Exchange on Monday as markets reacted negatively to the appointment of a general to head the company, a sign of growing interference by the Bolsonaro government in the economy .

The oil giant’s common stocks fell 20.48% at the close and preferentials 21.51%, while the Ibovespa index fell 4.87% and the Brazilian real fell 1.26% against the dollar.

On Friday, shares of Petrobras had already fallen by more than 7% following statements by President Bolsonaro who had referred to “changes” to come at Petrobras.

The loss of market capitalization reached more than 100 billion reais (18.4 billion dollars) during these two sessions, 72 billion on Monday alone.

The reason for this plunge: the announcement on Friday evening of the non-renewal of the president of Petrobras, Roberto Castello Branco, whom Mr. Bolsonaro blames for the four successive increases in fuel prices in less than two months (+ 35% since beginning of the year).

In his place, he appointed a reserve general, Joaquim Silva e Luna, ex-defense minister, whose name has yet to be approved by the group’s board of directors on Tuesday.

“Authoritarian impulse”, “military intervention”: criticism has erupted in the editorials of the main Brazilian newspapers, while many analysts fear that this untimely change in the head of the oil giant could seriously damage Brazil’s credibility with foreign investors .

– 180 degree turn –

But the far-right president did not seem too worried about the plunge in the share price of the largest public company in the country, preferring to stigmatize the business community who nevertheless helped to get him elected at the end of 2018.

“This shows that some people linked to the financial markets are very satisfied with a policy of Petrobras which had only one goal: to serve the interests of certain groups in Brazil,” he said Monday in front of supporters in leaving his official residence in the Alvorada Palace.

“Is the oil ours or a small group of Brazilians?” He asked.

These remarks show a 180 degree turn compared to the campaign promises of President Bolsonaro, who had appointed the ultra-liberal Paulo Guedes to the Ministry of the Economy.

Mr. Castello Branco is a “Chicago Boy”, like Minister Guedes, who seems to be losing more and more control of the country’s economic policy.

“With the change at the head of Petrobras, the government has clearly shown interference because Bolsonaro is against the systematic increase in fuel prices,” Alex Agostini of the Austin Ratings consultancy firm told AFP.

Jair Bolsonaro, whose popularity has declined, “has the next presidential election” in mind in 2022.

– “Demagogic reaction” –

The head of state however defended himself from any interference in the setting of fuel prices. “Have you seen the prices go down? Where is the interference? All I demand of Petrobras is transparency and predictability.”

The last time a government intervened on prices was under the presidency of Dilma Rousseff (2011-2016), a left-wing leader hated by Jair Bolsonaro.

“We know that it had cost very dear to Petrobras, which charged prices well below the market”, underlines Alex Agostini.

Financial difficulties for the group aggravated by the gigantic corruption scandal uncovered by the Lava Jato (Express washing) investigation, which has just been buried.

Petrobras has started to resurface in recent years, reducing its debt through asset divestitures.

The intervention of the far-right president earned him the nickname “Dilmonaro” on social media.

In an editorial, the daily Folha de S. Paulo on Monday described the interference of Mr. Bolsonaro as “a demagogic reaction to these price increases which hamper his trucker allies”, in reference to the threat of a strike by the truck drivers, who had paralyzed the country in 2018.

But for Miriam Leitao, columnist for the daily O Globo, the fact of “attacking the governance of Petrobras to control prices will not satisfy anyone, not even the truck drivers”.



#Petrobras #shares #tumble #Bolsonaro #unmoved

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