BNDES prepares anti-crisis measures

The Brazilian Development Bank is preparing measures to help mitigate the effects of the crisis, Valor has learned. Bank experts are finalizing the plans, which could be announced in the next few days and potentially include new credit lines and halting debt payments. Several borrowers have been contacting the development lender, which has about R$140 billion in cash and reporting an increasingly risk-averse market. BNDES officials are considering potential priorities and whether to coordinate with other banks to leverage their funds.

Source: Valor Econômico

http://www.valor.com.br/international

Government advances 25% of unemployment insurance

In order to preserve jobs and ensure the survival of companies amid the pandemic’s economic crisis, the government will advance 25% of unemployment insurance for those earning up to R$2,090 whose salaries are being reduced by companies. Also, it will pay part of the continuous cash benefit (BPC) for disabled people and the first 15 days of salaries of sick workers. With the new set of measures, which depend on congressional approval, the economic team expects to inject around R$179.6 billion into the economy. Despite the government’s help, no counterpart will be required from the benefited companies. “Companies are not forbidden from firingvworkers,” says Labor Secretary Bruno Dalcolmo. “The important thing is to provide flexibility.”

Source: Valor Econômico

http://www.valor.com.br/international

Klabin innovates with packaging paper fully made of eucalyptus

Klabin, Brazil’s largest manufacturer of packaging paper and corrugated cardboard packaging, will produce on a large scale the first kraftliner in the world fully made from eucalyptus fiber. The so-called Eukaliner will be made in Ortigueira, Paraná, starting in May 2021. The new machine to be used, which is part of the R$9.1 billion investment plan launched last year, will have 450,000 tonnes per year of capacity. The Eukaliner can be used in a wide range of products, especially in food boxes that travel the world, and in electronic commerce. Tests have shown that eucalyptus pulp offers good resistance to stacking because it is denser. In practice, this allows reducing the weight of paper used in packaging.

Source: Valor Econômico

http://www.valor.com.br/international

Chamber, Senate to vote remotely during pandemic

The Senate and the Chamber of Deputies agreed Tuesday to use systems that allow congressmen to discuss and vote on matters remotely from next week. Amid the novel coronavirus uncertain scenario, the idea is to prioritize actions to tackle the pandemic, but the measure could also prevent key bills from being left pending approval. At the Chamber, an application is being developed and should be ready in the next few days. The Senate is more advanced because a prototype was already under development since the truck drivers’ strike in 2018 to be used in situations of war, social upheaval, public calamity, pandemic, collapse of the transportation system or situations that make it impossible for congressmen to meet. According to Senate Secretary General Luiz Fernando Bandeira de Mello, the system will likely start operating on Friday.

Source: Valor Econômico

http://www.valor.com.br/international

States bet on local development agencies to accelerate growth

State governments are reinforcing their development agencies, unlike the slimming-down efforts seen at the federal level. Even the government of Rio de Janeiro, subject to the restrictions of the Fiscal Recovery Regime (RRF), is backing a regional development strategy involving financing of micro, small and medium-sized companies with a portfolio 46% larger than at the beginning of 2019, totaling R$247.6 million last month. The Espírito Santo Development Bank (Bandes) changed focus from individuals to small and medium-sized companies. In São Paulo, Desenvolve SP aims to expand credit portfolio from R$1.26 billion last year to R$2 billion this year. It has R$650 million available and is trying to raise another R$2.7 billion with international bodies such as the World Bank and the French Development Agency.

Source: Valor Econômico

http://www.valor.com.br/international

Brazilian quant funds outperform amid crisis

While Brazilian market bellwether Ibovespa is falling 28.5% on the year, quantitative investment funds (“quants”) are showing the opposite performance. The use of historical data to identify patterns and predict market trends using artificial intelligence and machine learning is leading some, like Seival’s fund, to post a 15.9% return until March 12. Other examples include Kadima LT, which is rising 4.01% this year, Murano’s multimarket (hedge) fund, which is returning 5.05%. Giant Capital’s Zarathustra is yielding 4.49%, while Pandhora shows a 1.75% gain in 2020.

Source: Valor Econômico

http://www.valor.com.br/international

Supermarket sales reach Christmas-like peaks

Brazilian supermarkets experienced a steep demand increase in the last few days, with some products reaching sales levels similar to those seen during Christmas, Valor has learned. Migration from bars and restaurants to supermarkets, and the home-office trend among workers as companies shutter offices to stop the disease’s spread, are behind the surge. Demand surpassed sales target by 30% in some stores, a source said. The São Paulo association of supermarkets, which represents the country’s biggest consumer market, is reporting up to 8.5% higher foot traffic in some stores over the weekend. Meanwhile, trade groups of the bars and restaurants industry are discussing ways to offset the slump.

Source: Valor Econômico

http://www.valor.com.br/international

Courts get ready to operate online

In a decision followed by several other courts in Brazil, the Superior Court of Justice announced on Monday that it would halt all in-person trials until March 27. The Federal Regional Court of Rio and the Regional Labor Courts of São Paulo and the Federal District have followed the decision. State courts in Rio de Janeiro, Rio Grande do Sul and São Paulo, and the Administrative Council for Economic Defense, have followed suit. The suspension of in-person trials doesn’t mean courts will shut down since all cases are digitized, and judges and workers have remote access to dockets, being able to conduct online trials and issue single-judge rulings.

Source: Valor Econômico

http://www.valor.com.br/international

Estrella Galicia revives Brazilian brewery project

Spanish brewery Hijos de Rivera, the family-controlled company that owns beer brand Estrella Galicia, is resuming plans to open a plant in Brazil. The company signed a letter of intentions with Minas Gerais state in 2017 to build a R$100 million brewery with capacity for 20 million liters a year. It was expected to begin operating in 2019, but Hijos canceled the project in 2018, claiming “business issues.” But now it is reviving the idea regardless of the pandemic’s potential impact, given that a weaker real to the dollar raises importation challenges. Hijos says Brazilian sales rose 24% in volume terms last year and are expected to grow as much as 30% in 2020.

Source: Valor Econômico

http://www.valor.com.br/international

Economists prescribe fiscal stimulus to mitigate pandemic’s effect

Amid a growing threat of more severe effects from the new coronavirus on activity, some economists say monetary policy is now insufficient to cope with the negative shock and argue that the government needs to inject money into the economy despite its fiscal constraints. Simão Silber, professor of the Economics and Business School of the University of São Paulo (FEA/USP), says that amid a supply shock production is interrupted and monetary stimulus can’t boost activity. “The Central Bank may lower interest rates, but it will only encourage demand when there is demand.” But Bráulio Borges, an associate researcher at Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre-FGV), says that making this change “in the eye of the hurricane” would be imprudent despite being a long-time critic of the spending cap. Tampering with fiscal rules at a time of strong risk aversion could increase uncertainty and further reduce the confidence of economic agents, according to him.

Source: Valor Econômico

http://www.valor.com.br/international