Thanks to the strong recovery of the United States and China’s economies, In April, Brazil succeeded in attracting significant amounts of international investment despite a complex domestic fiscal risk environment.. As of Wednesday, 14, the Brazilian stock exchange received 4.33 billion realis from foreign investment in the month, bringing the annual balance to $ 3.12 billion. In March, foreigners withdrew $ 4.61 billion from the country, worsening the balance in the negative.
Chinese and US data released this week showed strong signs of growth in the largest global economies caused by the Kovid-19 epidemic. The effectiveness of vaccination points to the reopening of economic activities and consumption, which helped Ibovespa to ignore domestic problems. This Friday, 16, the index closed at 121,113.93, a weekly increase of 2.93% and a monthly increase of 3.84%. The level of 121,000 had been lost since 14,000, when President Zaire Bolsonaro sacked Petrobras President Roberto Casten Branco.
“There was an improvement in global risk perception and it greatly favors emerging and commodity markets,” says Thomas Giberatoni, analyst at Portofino Multi Family Office. “Brazil’s wealth is intimately connected to commodities and has benefited from this global hunger,” he says. The week was a record breaking week on the US stock exchanges. The S&P 500 had weekly growth of 1.37% and monthly growth of 5.35%. Nasdaq recorded a weekly variation of 1.19% and a monthly variation of 6.08%.
Concerns about inflation also subsided and interest on US Treasury bonds for 10 years ended at a low of 1.59%. Expectations for approval of the Biden Infrastructure Package and expectations for the Fed to keep interest rates low result in a supply of dollars. This is good news for Brazil.
The real gains from the US risk appetite were real, up 1.73% against the dollar in the week and 0.82% in the month, at 5.584 reais. The trend is that US trillion-dollar aid will continue to melt the dollar against the world’s currencies. In this context, the Brazilian currency, which has already been greatly devalued in recent months, becomes an interesting investment, which has very high growth potential. The budget and fiscal risks of 2021, however, persist and can counteract good expectations about the real, depending on their direction.