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Brazil’s Petrobras Stocks Fall 24% in Two Months While Real Zooms Up

Brazil's stock exchange, Bovespa According to Economática, a Brazilian consultancy firm, oil multinational Petrobras saw its stocks fall 23.6%, from 472 billion reais to 361 billion reais, losing 111 billion reais, between June 1st and July 30.

During the same two-month period another Brazilian blue chip, the mining company Vale, lost 56 billion reais, with its shares dropping from 295 billion reais to 239 billion reais, a 19% devaluation.

The decline continued this Thursday, July 31, for both companies, at the last trade session of the month in the São Paulo Stock Exchange, the Bovespa.

While the Petrobras stock closed at 43.94 reais, an 1.5% drop, the Vale share lost 1.58% ending the month at 47.34 reais. The real continued strong being sold at 1.56 reais per dollar.

Why the sharp decline? Experts see two main reasons: the first is the fact that Petrobras and Vale are linked respectively to oil and iron, two commodities that have been going up for some time and now seem to have hit a ceiling. A second reason is due to the foreign investors who started to withdraw their money to what they consider safer havens.

The United States dollar depreciated 55.4% against the Brazilian real from December 31, 2002 to July 25, 2008, a period that encompasses the first and part of the second term in office of president Luiz Inácio Lula da Silva. The data were disclosed by Einar Rivero, director of Economática.

According to him, of the eight regions surveyed by the firm, Brazil was the one in which the dollar depreciated the most, followed by Colombia, which recorded a 38.1% variation during the same period.

Venezuela was the only nation surveyed in which the United States currency appreciated. According to Economática, the Venezuelan fixed the exchange rate several times since 2003.

In 2008, Colombia was the country in which the dollar depreciated the most, by 12%, followed by Brazil, with a variation of 11.1%. According to Rivero, the depreciation of the dollar shows the strength of the currencies in the locations surveyed: Mexico, Eurozone, Peru, Argentina, Chile, Brazil, Colombia and Venezuela.

The Brazilian real was the currency that appreciated the most against the dollar, 124.2% since December 31, 2002, followed by the Colombian currency, at 61.6%, and by the euro, at 50%.

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  • Show Comments (5)

  • robh

    this can’t go on
    Once the balance of payments goes too far into the red, which won’t take too long, the real should start to weaken. Otherwise I hope (vainky?) the central bank will do something.

  • ch.c.

    To Jay !
    so right !
    of the 59 Brazilians new issues that went out in 2007, over 70 % are traded BELOW their intial launching prices…by now August
    1, 2008.

    As I wrote, Brazil agricultural production is apparently booming. Is this not what we read everywhere ??????
    Well….Cosan stock price is down 50 % from its 2006 top. It went to 60 down to 20 and now 30 Brl. And just announced a quaterly loss, preceeded by a 2007 LOSS…of course.
    Agrenco launched last year is down 88 % from its initial price.
    JBS the largest meat seller, announced its 4th quaterly loss.

    Better yet :
    Sugar is down 40 % from its 2005 peak !
    Orange juice is down 50 % from its 2005 peak.
    Coffee is fluctuating between 120 to 150 cents per pound or so, since 2004/5 or so.
    Ethanol is still not competitive to oil despite the swear it was in 2005 when oil was traded at around US$ 50.-

    Still better yet : these commodities prices are quoted in a currency that went down sharply : the US$.
    End results : when quoted in Brazilian currency, these prices are at or around the prices traded in the depression year of….2002 !!!!!

    Anyone is free to make the same maths in using the 2002 prices of corn, wheat, or soyabeans. Prices are not any higher than in 2002 when expressed in Brazilian currency.

    In reality the only booming agri industries were the ones selling the inputs to Brazilian farmers, namely Syngenta, Monsanto, BASF, Deere, foreign fertilizers producers.
    Welll, fact is none are Brazilians companies. And all are doing historical record PROFITS !!!! Even when measured is Brazilian currency to stay fair….on the comparisons !!!!!!

    Viva Brazil, the country who always works hard to hide the truth.
    The truth also being that early in 2003 your famers were very happy and got paid higher local prices in local currency than today. In fact in 2003 they made so much money they bought NEW tractors and harvesters paying them….CASH…and that today despite the apparent, apparent because measured in a weakened foreign currency the US$ is, they need the BNDES subsidizes rates to be just above break even…at best.

    Yessssss….in 2002…..when Brazil and other emerging countries complained about the LOW world commodities prices, in fact their farmers never erned so much money. Proof they were already…CHEATING, LYING AND HIDING.
    And today with “apparent record high food prices” Brazil caressing its navel as to how good they are, are in fact barely break even at best, when not losing money.

    As I said so many times, never ever trust what a Brazilian say. He always cheat, lie and hide.

    Proven once more !

    And once more Brazilians are drown in their own contradiction mud.

    And in finances never ever buy an output producer, not even european or american such as Archer Daniels.
    Simply buy a input producer as mentionned above, They will boom as long a production goes up, regardless if prices are up or down.

    Also proven….once more !!!!

    Laugh….laugh….laugh….laugh….laugh….laugh….laugh

  • JAY GLENN

    I THOUGHT ALL THE WALL STREET BROAKERS WERE INVITED TO BRAZIL AND IT’S WONDERFULL STOCK MARKET
    THE USA HAS A COLD, YOU BOYS will get Pneumonia.

  • ch.c.

    To robh
    “Once the balance of payments goes too far into the red, which won’t take too long”

    You are so right.
    BRAZIL current account DEFICIT is already in the red…..at the HIGHEST AMOUNT……on record !!!!!

    Thus where is their problem ? Elsewhere of course :
    Simply providing the world HIGHEST INTEREST RATES….after inflation !
    HIGHEST for years until recently. Now second HIGHEST after Turkey. They just switch their ranking. smile.

    And Brazilians corner…THEMSELVES !!!
    They continue to increase their interest rates to try to reduce their increasing inflation.
    Instead of simply increasing the banks reserves requirements…which would by definition….reduce their lendings….which would reduce the inflation rate.

    It is funny that Brazil INSISTS TO HAVE ONE OF THE WORLD HIGHEST INTEREST RATES….after inflation….to keep a strong currency, while other nations HAVE a far lower government rates…and can still have a strong currency.
    Or said otherwise, more idiots than Brazilians officials, there a not on earth…except Turkish officials !
    Why so ? Good question and the answer is very very simple :
    They want to protect their administration bureaucrats employees AT ALL LEVELS AND REGARDLESS OF COSTS..IN THEIR PENSIONS FUNDS !!!!

    And by offering such high rates after inflation and for which interests must be paid regularly out of the national/states/municipals budgets….naturally less will be available for Infrastructure, healthcare, education and low cost housing….by defintion.
    Or said differently, the more is taken at the top for the minority, the less is available for those NOT AT THE TOP AND IN CONTROL of the country.
    Despite Bin the Crook promises and statements, His Highness and his gangs DONT CARE ABOUT THE 95 % of the population.
    Already proven by ALL his predecessors…by the way !!!
    And history has proven more than once that sooner or later….it ends up in a BIG ECONOMIC AND FINANCIAL MESS.

    Does anyonme know what is the country which on average had the highest inflation rate in the last 50 years ?
    Brazil got the platinum medal !!!!
    And in every economic boom they also said….”this time is different, the past wont happen again”, until proven wrong again…of course.
    Therefore Brazil has been nicknamed a BOOM and BUST economy. And nothing has changed, despite the actual longest economic recovery. It is simply stretched but will not last.
    I just remind everyone that Brazil needed 26 years, yesss from 1980 to 2006 to have again their minimum wages equalling 2 monthy food baskets !!!!! Food baskets dont of course include shoes, clothes, education, meds, healthcare etc etc etc !!!!
    Such a HIGH ECONOMIC GROWTH country as Brazilian pretend to be, still have only 10 % of paved roads, 50 % of which badly maintained and having millions of potholes.
    And Brazilian education was recently ranked 46th out of 50. Test AND ranking made by Brazilians…THEMSELVES.

    Re-read above the whys…there is apparently not enough money.

    Cheaters and liars always cheat and lie. And they refute and deny the evidences…of course !!!!

    😀 😉 😀 😉

  • ..

    [quote]Otherwise I hope (vainky?) the central bank will do something. [/quote]

    The Central bank is as clueless as I am 😉

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