July 31, 2020


1. Large companies report record losses in Q2

Financial results for large Brazilian companies listed on the stock market revealed record losses during the second quarter. Analysts believe that the calculated profit – not taking into account interest rates, taxes, depreciation and amortization – could drop 73% in comparison to the same period in 2019. The greatest losses were in the air travel sector, with an average drop in revenue of 90%. Among banks, Bradesco registered a 40.1% drop in its net profit, down to R$ 3.9 billion (USD $750.8 million). State-owned oil giant Petrobras was also affected, ending the second quarter of 2020 with a loss of R$ 2.7 billion (USD $519.8 million). In the beverage sector, Ambev reported that its net profit fell 51.4% from April to June. Public spending has also been affected. The first six months of the year registered a R$ 417 billion (USD $80.3 billion) deficit, according to the treasury – the worst such result over the past 23 years. Another indicator of a negative situation was published this week by the Brazilian Institute of Geography and Statistics: out of the 2.77 million companies that remained in business as of the end of June, 62,4% registered some kind of loss while just 15.1% saw growth. The majority of them (61.8%) had a reduction in the number of employees of up to 25%.

Valor Econômico: Empresas registram recorde de perdas
Folha de S.Paulo: Petrobras tem prejuízo de R$ 2,7 bilhões
G1: Desempenho do setor de bebidas também é afetado
Folha de S.Paulo: Contas públicas têm pior resultados em 23 anos
Valor Econômico: 62,4% das empresas sofreram impacto negativo no semestre

2. Foreign investors withdrew USD $31.2 billion in the first half of 2020

This week, the central bank revealed that there has been a rapid withdrawal of foreign financial investments from Brazil. According to a government report, investors have withdrawn USD $31.2 billion in the first half of the year. The sum combines stocks, investment funds and fixed income titles. It was the largest drain of resources from the Brazilian economy since 1995. During the same period last year, the country registered an increase in capital of around USD $9.09 billion. Fernando Rocha, head of statistics at the central bank, said that the largest volume of investments (USD $22.2 billion) was moved in March, following the arrival of the coronavirus in the country. “This withdrawal in March, specifically, is very much connected to the uncertainties of the most serious period of the crisis, or before it,” he says. In the past 12 months, the withdrawal of resources from foreign financial investments in Brazil amounted to USD $47.9 billion.

G1: Investidor estrangeiro retira US$ 31,2 bi de aplicações no Brasil

3. New natural gas legislation could lead to R$ 43 billion in investments

The Chamber of Deputies has included a bill that creates the new Gas Law in the urgent voting session in Congress. The new law could lead to R$ 43 billion (USD $8.33 billion) in investments, according to the federal government. The bill proposes allowing private companies to enter the market of transportation and distribution of natural gas in the country. The gas can be used as fuel, in thermoelectric plants and other derivative products. Opening up the market could benefit large consumers of gas, such as factories and electric energy generators. According to the Ministry of Mines and Energy, the bill results from a consensus in the sector and offers the best regulatory, judicial safety and isonomic treatment practices to expand the market. Producers, transporters and consumers are in favor of the bill, but state public companies are asking for changes. The rapporteur of the bill in the Chamber of Deputies, Laércio Oliveira (PP-SE), said that he will maintain the bill as it is. “The bill has been developed as a group and I have been working on it since 2019. I plan to protect it, as it is the result of a lot of negotiation.”

O Estado de S. Paulo: Marco do Gás pode destravar R$ 43 bi em investimentos
CNN Brasil: Câmara aprova urgência para vota Lei do Gás

4. Bolsonaro’s allies in Congress could split

The federal government is threatening to close key positions in the administration that are currently occupied by people nominated by former Bolsonaro allies. The reaction comes after DEM and MDB – two of the largest parties in the legislature – decided to vote against the administration to show opposition to the unofficial new government leader in the Chamber of Deputies, Representative Arthur Lira (PP-AL). The coalition of centrist parties known as Centrão had 221 out of the 513 federal representatives. It then became a group of 158 politicians and could go down to 136 if PTB and Pros also decide to leave. Bolsonaro’s team is waiting to see how the parties will act in the next vote before continuing with its plan. Although party leaders deny it, politicians are negotiating the presidency of the Chamber of Deputies. Elections will take place in February 2021 and Lira is the candidate who will likely receive support from the administration.

Valor Econômico: Governo ameaça cortar cargos de partidos por infidelidade
Folha de S.Paulo: O que muda para o governo com o racha?
O Globo: Partidos do Centrão articulam criação de bloco independente

5. One in every three coronavirus tests in São Paulo returns positive result

A study by the state government of São Paulo reveals that one in every three tests to confirm a coronavirus infection turns out positive. Since the beginning of the pandemic in March, São Paulo’s public health system has performed 1,778,225 tests. The daily average of tests went from 900 to 23,000 in June. By July 27th, the state registered 21,300 tests a day. São Paulo has reached over 23,000 deaths and over half a million people infected (over 520,000 confirmed cases). Across the whole country, 91,000 people have died and 2.6 million have been diagnosed with the disease. Yesterday, the federal government confirmed that First Lady Michelle Bolsonaro has been diagnosed with COVID-19. The President was released from isolation on the 25th, after having been diagnosed with the disease. On Thursday, during his first trip following isolation, Bolsonaro rode a horse and shook people’s hands in Piauí. He was not wearing a mask.

Folha de S.Paulo: Um terço dos exames dá positivo em SP
O Estado de S. Paulo: Primeira-dama é diagnosticada com a doença
G1: Liberado de isolamento, Bolsonaro não usa máscara em aglomeração
O Globo: Acompanhe notícias sobre a pandemia
IRRD Covid-19: Veja o mapeamento de casos no Brasil e no mundo