Documentation for bid was sent Friday to the Federal Court of Accounts

09/28/2022


A container ship docked in Santos, Brazil’s largest port — Foto: Ana Paula Paiva/Valor

A container ship docked in Santos, Brazil’s largest port — Foto: Ana Paula Paiva/Valor

The Ministry of Infrastructure expects to auction Santos Port Authority, the company that manages the Port of Santos, in the second half of December. The documentation for the bid was sent last Friday to the Federal Court of Accounts (TCU), said the ministry’s executive secretary Bruno Eustáquio.

According to him, the ministry expects a lot of competition for the asset, one of the most important in the industry. Mr. Eustáquio, who participated in the second day of the event Rio Oil & Gas, said that over the next few days he will have an agenda with 23 potential buyers, a group that includes banks, investment funds, and companies already operating in the port.

For Mr. Eustáquio, the port concession enters a new phase after TCU’s analysis. “We are being sought by various interested buyers, including national and foreign players, and we will begin to figure out [how much interest actually exists] from now on,” the secretary said. Last week, the government had approved the model and conditions for the privatization of Santos Port Authority (SPA).

*By Fábio Couto — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

Experts criticize mechanism, which is spent with little technical criteria

09/28/2022


Congress has been increasing its power over public health budgets year after year. Today, for every R$10 spent by the federal government in this field, deputies and senators control R$1.10. Eight years ago, they decided on the destination of R$0.20. Of this total, about 85% goes to regular expenditures and only 15% are investments. With a new feature: the so-called secret budget, or public funds earmarked for discretionary use by lawmakers, can be used to pay salaries.

The increase in lawmakers’ control over the health budget has happened amid cuts in essential sectors of the ministry. The federal program that subsidizes medicines and gives others for free will have its budget cut by 59% next year. Revenues for initiatives against cancer have been cut by 45% for 2023. This year, the amendments represent more than three times the ministry’s total funds for investments, of only R$4.7 billion.

The strengthening of Congress in the decision about this budget has helped some cities with strong political sponsors in Brasília to expand the service to the population, but it is criticized by experts for hindering the management and planning of the sector and leaving the municipalities “dependent” on the Congress.

“Public health policy is made with planning. How can I invest or expand care if I have no guarantee that I will have the money next year? The congressional earmarks completely disorganize the system,” said Geraldo Reple Sobrinho, the municipal health secretary of São Bernardo (São Paulo) and head of the Council of Health Secretaries of São Paulo (Cosems-SP).

This uncertainty ends up creating a “dependency” of the municipality on lawmakers. In healthcare, 70% of the expenses are with human resources. If the city expands the service and hires more employees with the money sent by a lawmaker this year, but the money is not granted the following year, the government accounts will be in serious difficulty and services will have to be cut. This is different from an investment amendment, which does not require more money after the purchase of the equipment or the end of the work.

Mr. Reple Sobrinho says that the ideal would be that the funds were in the Ministry of Health’s budget with clear destinations and transfer rules for each entity. “If today I receive R$1 million in earmarks and next year the deputy is no longer with the mayor or lost the election, the city will have nothing and the population will be unassisted,” he warned.

The use of amendments for spending on healthcare costs of municipalities and state governments exists since the individual earmarks became mandatory in 2015, but they cannot be used to pay salaries or other expenses of a permanent nature. In the case of secret budget, created in 2020, there is no such prohibition. These transfers are used to attract the support of mayors, who serve as important canvassers. The secret budget also helped to increase the power of Congress over the federal health budget, to 11% now from 3% in 2014.

Gil Castello Branco — Foto: Ruy Baron/Valor

Gil Castello Branco — Foto: Ruy Baron/Valor

Gil Castello Branco, General Secretary of NGO Contas Abertas, points out that the situation “will reach its extreme limit” next year. The 2023 budget proposal has already been sent to Congress allocating R$10.4 billion for lawmakers to decide how they will be distributed in the Ministry of Health through the secret budget — because if this were not done, the government would not even be able to meet the minimum spending in the area, determined by the spending cap.

“This is very bad. The Constitution requires a series of epidemiological and socioeconomic requirements for the government to distribute health money. If it is distributed by the legislators without any technical criteria, which is what has been happening with the rapporteur’s amendments, you will lose the quality of spending,” said Mr. Castello Branco.

This is also the concern of the executive secretary of the National Council of Municipal Health Secretaries (Conasems), Mauro Junqueira. “If the lawmaker wants to use amendments, it should be something extra, not included in the ordinary funds of the Ministry of Health, the constitutional minimum,” he said. “The funds from amendments should be an extra. In this case, they would be important,” he said.

Together with the R$10.4 billion in amendments from the rapporteur for health, deputies, and senators will indicate more R$5.85 billion in congressional earmarks (because 50% of them must go to health). These two instruments alone will guarantee that they maintain control over 10.8% of the ministry’s funds, the same level as in 2022. In addition, they will still have the right to choose the destination of R$7.7 billion from the amendments of the state caucuses, which are not binding and can go to any area of the government.

Chamber of Deputies Speaker Arthur Lira (Progressive Party, PP of Alagoas) has argued that the growth of congressional earmarks has changed the reality of municipal services and that, when he arrives in any city, the first to thank him is always the health secretary. In an event at BTG Pactual last month, Mr. Lira said officials in Brasília do not know the reality of the municipalities as well as the legislators and that he intends to hold an event after the election for municipal secretaries to disclose what has been done with the funds.

One city is Flexeiras, in Alagoas, with 8,700 voters, where the PP mayor supports Mr. Lira. The municipal health secretary, Tatiana Lins, says that the amendment sent by the speaker (R$2.8 million) allowed to equip a basic health unit with an electrocardiogram and hire doctors to attend 10 specialties, performing triage before referring patients for more complex care in the state capital Maceió — a trip carried out in four new cars acquired with the funds transferred to the city.

The president of Cosems of Alagoas and health secretary of Jundiá, Rodrigo Ferreira de Lima, however, said that “the logic of the rapporteur’s amendment does not always respect” the necessary planning for the area and caused in the colleagues an “urgency” to seek those funds to assure local care. “You stop aiming to meet the collective planning and start meeting political demands.”

He also points out that there is a disparity among municipalities. Mar Vermelho (Alagoas), for example, with 3,400 inhabitants, spent R$1,212 per capita on health last year, while Messias, with 18,000, spent R$617 per capita. The reason? Mar Vermelho received R$899,300 from the rapporteur’s amendment for health, while Messias, with six times more residents, received only R$115,000 more.

“In Alagoas, when you have a stronger political sponsor, you receive more. But the health situation of that municipality is not analyzed, not the real need. You take [money] from high complexity and give it to a city of 5,000 inhabitants, whose main priority is the payroll,” said Mr. Ferreira de Lima.

Speaker Arthur Lira declined to comment.

The Minister of Health, Marcelo Queiroga, avoided criticizing this model, which is supported by the Bolsonaro administration in exchange for the approval of measures of its interest in Congress, but says that, “by the logic of the administrator,” to see the budget of his area depending on the amendments of rapporteur “is one more factor” to be considered. “The fact that Congress allocates earmarked funds does not necessarily mean that this allocation will be improper. We need to talk to reach an agreement,” he told Valor.

Mr. Queiroga says he criticized when Congress determined the purchase of equipment for a health unit in a small town. “Lawmakers do not do this to harm the health system. They do so to serve his base. I’ll have to turn on my head to be able to tell the lawmaker: ‘Look, you can help your base more if, instead of putting these funds here in this town, you put it in another town in the region’,” he said.

*By Raphael Di Cunto, Fabio Murakawa

Source: Valor International

https://valorinternational.globo.com/

Study shows that low female presence in labor force affects economy

09/28/2022


Janaína Feijó — Foto: Divulgação

Janaína Feijó — Foto: Divulgação

The low presence of women in the labor market, compared to men, means that the labor force in the country today is below its potential. A survey carried out by Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre-FGV) shows that if all women of working age joined the labor market, there would be productivity gains for a certain period and higher GDP growth. The study points out that the gender disparity occurs not only in the participation rate, but also in income, and exists among the better-paid occupations as well.

The women’s participation rate in the labor market went to 53.2% in the second quarter of 2022 from 51% in the second quarter of 2012, according to microdata from the Continuous National Household Sample Survey (Pnad) of the Brazilian Institute of Geography and Statistics (IBGE). The men’s rate went to 72.6% from 74.2% in the period. Before the Covid-19 pandemic, the participation rate was 54.3% for women and 72.7% for men.

According to economist Janaína Feijó, author of a survey on gender differences in the labor market, the female participation rate had been growing consistently, and the male participation was showing stability and declining. “Between 2014 and 2019, this difference, which used to be about 20 percentage points, was falling. The pandemic came and affected mainly women. As the economy picked up, men’s trajectory returned to its trend, but women’s did not.”

In addition to having lower participation in the labor market, women are also more excluded from it. Since 2012, the unemployment rate for women has been higher than that of men, and since 2019 this difference has widened. In the second quarter, the female unemployment rate was at 11.6% (5.5 million), while the male rate reached 7.5% (4.6 million). During the pandemic, the female unemployment rate peaked at 18%, adds Ms. Feijó.

She argues that a largest female participation rate would give a boost to the economy’s productivity and contribute to growth. “This is a strategic variable. Getting more women into the labor market tends to generate positive effects on the economy,” she said.

According to calculations by economist Fernando de Holanda Barbosa Filho, with FGV/Ibre, the reduction of the participation gap between men and women in the labor market could add up to 0.3 percentage points of growth to the GDP over 20 years.

“This can, over time, compensate for the lower growth in the economically active population that we will have because of the demographic transition,” he said.

He adds that many experts compare Brazil to Italy in terms of demographics. “And, taking that into account, they find it difficult for female and male participation rates to converge, because this difference still persists in Italy.”

Researcher Fernando Veloso points out that several studies show an important contribution of the female labor force to U.S. productivity and cites a study by researchers Tiago Cavalcanti, Letícia Fernandes, Laísa Rachter and Cézar Santos showing productivity gains with the fall of barriers to female participation in the labor market. They state that 36% of productivity gains between 1970 and 2010 in Brazil can be attributed to greater female participation.

Besides the unequal proportion of men and women in the market, the survey by Ms. Feijó shows that there is a considerable income difference between men and women, relatively stable over the last 10 years. Currently, men receive an average of R$2,917, while women get R$2,292.

The gender income gap went to 24.7% today from 31.5% in 2012. When a more precise measurement is made, in which variables such as same educational level, race, census area, activity sector, and whether the job is formal or not, the difference is even greater, going to 34.1% from 42.8%.

The discrepancy persists even at higher educational levels. “This means that they are being penalized more. Even with more education, they have lower salaries than men,” said Ms. Feijó.

When the education and socioeconomic level variables are combined, the difference increases in the higher income strata. Among workers who have completed university between 24 and 60 years old, the income distribution is more asymmetric in the richer strata. In the group of the poorest 10%, women account for 72.7% of salaries paid, and men for 27.3%. In the group of the richest 10%, the picture is inverted: women represent 33.1% of the wages paid, and men, 66.9%.

This is reflected in the universe of occupations that pay the most, in which women are also underrepresented, the study shows. Among general directors and managers, 71% are men who earn about R$17,269, and 29% are women who earn R$15,302.

Of the program and application developers and analysts, 82% are men who earn R$7,902 and 18% are women with average salaries of R$6,300. There is more balance among managers in administration and services (50% and 50%) and physicians (51% men and 49% women). Even in these positions, the salaries paid to men are usually higher.

“The Consolidation of Labor Laws prohibits different remuneration [when] performing the same job, the same function, with the same qualification. But what we observe is that there is an illegal practice that is difficult to control because people generally don’t know how much the other person earns,” said Ligia Fabris, a professor at FGV’s Law School in Rio de Janeiro.

She argued that in the private as well as the public sector, men generally rise up faster than women, in the phenomenon known as the “glass ceiling,” that is, an invisible obstacle that is not in the law or in the company’s bylaws.

“Women find it difficult to get into the job market, which shows up in the lower participation rate than men. When they offer their labor force, they face greater difficulty, which shows up in the higher unemployment rate than men,” said Ms. Feijó.

“Once in the market, even with productive attributes equal to men, they tend to have lower pay. And if we look at income by income distribution, we see that they are underrepresented in the higher strata and in positions that pay more. It’s a whole context that shows how the situation of women in the labor market is more delicate.”

*By Marsílea Gombata — São Paulo

Source: Valor International

https://valorinternational.globo.com/

Central Bank’s Focus survey indicates inflation median at 5,88% in 2023 and 5% in 2023

09/27/2022


Brazilian economy had significant growth in the second quarter, of 1.2% in comparison to the previous quarter — Foto: Edilson Dantas/Agência O Globo

Brazilian economy had significant growth in the second quarter, of 1.2% in comparison to the previous quarter — Foto: Edilson Dantas/Agência O Globo

The median of the market’s projections for the Brazilian economy growth in 2022 went up again, to 2.67% from 2.65%, according to Focus, Central Bank’s weekly survey with economists, released this Monday, with estimates collected until the end of last week.

For 2023, median expectations for GDP growth remained at 0.5%. For 2024, it rose to 1.75% from 1.7%.

The Brazilian economy had significant growth in the second quarter, of 1.2% in comparison to the previous quarter, informed the Brazilian Institute of Geography and Statistics (IBGE) at the beginning of September.

The result exceeded the consensus of 0.9% of the economists heard by Valor and reflected the strong impact of the resumption of in-person activities, with the end of the restrictions adopted in the pandemic, and the government’s stimulus measures, such as the release of funds from the Workers’ Severance Fund (FGTS) accounts, and the early payment of the 13th salary, a year-end bonus for retired workers and pensioners of the National Institute of Social Security (INSS).

The third quarter GDP will be released on December 1.

The median of the projections of market economists for Brazil’s benchmark inflation index IPCA for 2022 fell to 5.88% from 6%, according to Focus.

For 2023, the median expectations for the Brazilian official inflation also dropped, to 5% from 5.01%. For 2024, it remained at 3.5%.

For the Selic policy interest rate, the median of the estimates remained at 13.75% at the end of this year, 11.25% in 2023 and 8% in 2024.

*By Felipe Frisch — São Paulo

Source: Valor International

https://valorinternational.globo.com/

Indicator for September saw strongest rise since August 2020

09/27/2022


Driven by favorable expectations, the Consumer Confidence Index (ICC) rose by 5.4 points in September, compared to August, to 89 points, the highest since January 2020 (90.4 points), think tank Fundação Getulio Vargas (FGV) reported Monday. It was the strongest rise of the indicator since August 2020 (7.7 points), said Viviane Seda, the coordinator of the foundation’s surveys.

Speaking about the result, Ms. Seda added that consumers have a big expectation of a lower inflation scenario in the coming months — which opens room, in the family budget, for more purchases. At the same time, the recent signs of improvement in employment also indicate to Brazilians a good prospect for September in the income from work, with hopes of continuity and good job generation.

However, she gave a warning about 2023. “We will have a challenging economic scenario for the next administration, with possible tight fiscal policy, and the possibility of a global economic slowdown,” she said. This, in practice, casts doubt about the maintenance of expressive increases in the ICC in the long-term horizon.

When detailing the evolution of the ICC from August to September, the economist highlighted the impact of rising expectations. In the two sub-indicators of the ICC, the Present Situation Index (ISA) rose 1.6 points to 73.3 points in September, compared to August; but the Expectations Index (IE) advanced more, with a 7.6-point rise to 100.2 points. “This increase in expectations was the highest since August 2020 [12.3 points],” she said.

This greater confidence in the future also favored the financial situation in the next six months. This indicator rose to 100.8 points in September, the highest level since January 2020 (81.7 points), with an increase of 10.4 points in September compared to August, the highest since November 2018 (12.7 points).

The fact that elections are just around the corner also helped to raise expectations of a more positive financial situation in the future. She said that a new administration — or even reelection — usually brings hope of a better scenario for the economy and, consequently, for the household budget. “No wonder that the increase in the financial situation indicator was the most intense since 2018,” she said, recalling that that year was also a presidential election.

But she stressed that the elections are not yet set. Ms. Seda also said that there is no way to know exactly how the macroeconomic environment will be in 2023. “There is no way to say that this confidence will continue to improve,” she said.

*By Alessandra Saraiva — Rio de Janeiro

https://valorinternational.globo.com/

First Brazilian device will monitor corn and soy in the state of Maranhão

09/27/2022


The maiden mission of the first Brazilian agricultural nanosatellite will be to monitor corn and soy crops in the northeastern state of Maranhão. A partnership of technical and financial cooperation between the Brazilian Agricultural Research Corporation (Embrapa) and Visiona Tecnologia Espacial will enable the capture of images of the planted areas by the VCUB 1 — considered a validation satellite. The equipment, as big as a shoe box, will be launched into space in early 2023 by a rocket belonging to the U.S. company SpaceX, owned by billionaire Elon Musk.

VCUB 1 is expected to improve the visualization of agricultural targets, located on the ground, of the public images of the U.S. and European government satellites that are used for crop monitoring. The nanosatellite will pass 14 times a day over the country, rotating in the opposite direction of the Earth, increasing the amount and quality of data collected for agriculture. The equipment will have an unprecedented system in Brazil, which allows the camera to be precisely aimed at the desired location or to perform an orbit correction, among other applications.

Embrapa and Visiona – a joint venture between Telebras and Embraer that operates as an integrator in the space industry and leads the remote sensing market in Brazil – believe that the technology can offer an unprecedented solution in obtaining more accurate estimates of crop productivity. The Foundation for the Support of Research and Development (Faped) is also participating in the agreement.

The partnership was named Estimation of Agricultural Productivity by Means of a Spectral Agrometeorological Modeling. João Antunes, a researcher at Embrapa Digital Agriculture and technical manager of the agreement, said that the initiative will mean an evolution of API Agritec (agriculture-oriented programming interface) to provide more assertiveness in productivity forecasts for soybean and corn crops in Maranhão. Under the agreement, the research center will be responsible for validating the information, spatial images, and maps of agricultural crops provided by Visiona.

Farmers in Maranhão have registered their farms, indicating their location, the crops they grow there and the estimated productivity. These data are cross-referenced with Embrapa’s data and images from other satellites already available. When the VCUB is in operation, the nanosatellite information will be incorporated into the interface.

However, this is expected to happen only by the end of second half next year. After being launched, the nanosatellite will undergo a trial period of three to six months, when all subsystems will be put to test, and validated. Initially, Visiona’s idea was to launch the equipment in 2021, but there was a delay.

VCUB 1 will be equipped with a high spatial resolution camera specifically designed to capture agricultural targets in greater detail. The technology will enable the capture of detailed images 3.5 meters from the ground. Satellites currently in operation provide images in 5 to 30 meters detail.

“When agrometeorological data is associated with satellite images, the models gain precision, allowing greater certainty in decisions. Furthermore, the data collection system can serve the Internet of Things (IoT) market in places with little infrastructure,” Embrapa CEO Celso Moretti said.

João Paulo Campos — Foto: Divulgação

João Paulo Campos — Foto: Divulgação

“The possibility of combining high-quality images and collecting data from sensors in the field makes VCUB a powerful platform for agricultural applications, and the partnership with Embrapa will be fundamental to transform this potential into concrete solutions aimed at the Brazilian market,” Visiona CEO João Paulo Campos said.

*By Rafael Walendorff — Brasília

Source: Valor International

https://valorinternational.globo.com/

Mining company signed R$184mi lease contract for area to install solid bulk terminal

09/27/2022


Mining company Bemisa, part of the Opportunity group, signed on Monday a contract worth R$184 million to lease an area in the Suape port complex, in Pernambuco, where it intends to build a solid bulk cargo terminal with an estimated investment of R$1.5 billion.

The venture is part of a larger project that includes an iron ore mine in Piauí and a railroad to replace what would be the Transnordestina railway in the Pernambuco stretch, with 717 kilometers. The three projects total more than R$10 billion in investments, of which about R$5.7 billion refer only to the railway part.

The lease contract for the 57.8-hectare area is valid for 30 years and was signed with the government of Pernambuco. The terminal in Suape will have the capacity to receive and ship 50,000 tonnes of ore per day, besides the potential for storing 780,000 tonnes. When it is operational, the terminal is expected to employ 400 people.

Bemisa’s project is presented as an alternative to part of the original Transnordestina project. Begun in 2006, the railroad was only half finished – the stretch that goes through Ceará – under CSN’s command.

Luís Vidal, a member of Bemisa’s board, says that the idea is to undo the regulatory knot, improving legal security, and thus reduce the project’s risks to attract more investors interested in using the railway to export production through Suape.

Bemisa and the government of Pernambuco have begun discussing alternatives to unlock the Transnordestina situation in 2019. In December, the company obtained permission from the Ministry of Infrastructure to build a railroad starting in Eliseu Martins (Piauí) and running through Pernambuco with a similar route to that of Transnordestina.

According to Mr. Vidal, the project is vertical and its three parts (mine, railroad and terminal) are interdependent. “The election is an important step for us to know how the federal government is going to position itself in relation to all of this. Investors will also respond to the new government and we will be able to attract them more quickly or not,” Mr. Vidal said.

Governor Paulo Câmara (Brazilian Socialist Party, PSB) said that Bemisa’s project can be a structured solution for several productive arrangements in the Northeast region. Port of Suape CEO Roberto Gusmão highlighted the grains of Matopiba (region bordering the states of Maranhão, Tocantins, Piauí and Bahia), the fruits of the São Francisco River Valley, and the plaster producing region of Pernambuco.

*By Marina Falcão — Recife

https://valorinternational.globo.com/

Ibovespa drops 2.33% and interest rates rise amid global worsening

09/27/2022


The week leading up to the elections in Brazil began in a very tense manner in the financial market. The foreign exchange rate reached R$ 5.4 to the dollar, the highest in more than two months. The benchmark stock index Ibovespa ended Monday’s session down 2.33% and interest rate futures rose at Exchange B3.

The growing tensions in the international scenario, with ever stronger fears of a recession, have hit the already tense local market, which underperformed its peers on Monday. The real had the worst performance among the 33 major global currencies. At the end of the session, the foreign exchange rate advanced 2.52%, to R$ 5.3804 to the dollar – after going as high as R$5.4164. At the end of the day, the Central Bank announced that on Tuesday it will hold a foreign exchange auction of up to $1 billion.

“Now on the eve of the election, there is a tendency for investors to go ‘lighter’ for the weekend, reducing their exposures,” said Fabio Guarda, a partner and manager at Galapagos Capital. “We have a very full week in the country, with the release of [Brazil’s mid-month inflation index] IPCA-15 on Tuesday, the Copom [Monetary Policy Committee] meeting minutes, and the Quarterly Inflation Report. This situation precipitates a little elimination of risk and a reduction of exposure to the local market. They [foreign investors] end up leaving because of a greater risk, which does not necessarily involve a worsening scenario,” he adds.

In the stock market, the negative mood affected the market in general. Only 3 of the 92 Ibovespa stocks ended the trading session with some gain. Among the biggest drops, 3R Petroleum ON lost 6.83%, Petz ON retreated 6.63% and Magazine Luiza ON, 6.26%. Considering the blue chips, Itaú PN retreated 1.80%, followed by Bradesco PN (-1.59%). Vale ON fell 0.83% and Petrobras PN decreased 1.6%. The Ibovespa, after falling 2.33%, closed at 109,114 points – the lowest level since August 9.

In fixed income, the Interbank Deposit (DI) rate for January 2024 rose to 12.95% from 12.81%; and for January 2027, it advanced to 11.695% from 11.38%.

Gustavo Menezes — Foto: Claudio Belli/Valor

Gustavo Menezes — Foto: Claudio Belli/Valor

Globally, the new tax plan announced by the UK government, which made investors price a significant interest rate hike by the Bank of England (BoE) at its next meeting, was the main catalyst. “The big change came from the behavior of the markets abroad. We ended up entering the stress package in this movement started in the UK yield curve,” said Gustavo Menezes, macro manager at AZ Quest.

According to Mr. Menezes, the emerging currencies, which were somehow holding up against the currencies of developed countries, could not pass unscathed with such a large magnitude of interest rate hikes, which ended up affecting Europe and the United States. He suggests that the market is starting to question and get ahead of possible future postures of other central banks.

The DXY index, which measures the dollar’s strength against a basket of six major currencies, was trading up 0.82% around 6:00 pm, at an all-time high of 114.119 points. Compared to emerging currencies, the dollar advanced 0.92% against the Mexican peso; 0.72% against the South African rand; 2.42% against the Chilean peso; and 0.18% against the Turkish lira.

“Last week, Ibovespa rose more than 2% and the U.S. stock markets closed in sharp decline, so we are left with some fat. And in the final week before the election, it is normal that the stock markets get more nervous,” said Pedro Galdi, an analyst with Mirae Asset. He also highlighted that the possibility of a recession in Europe and the United States, the slowdown in China, and the war in Ukraine contribute to the environment of volatility. “It is the investor who wants to reduce risk by going where there is more liquidity,” says Mr. Galdi.

Regarding the stock market, despite short-term volatility, Goldman Sachs said in a report that Ibovespa could reach 121,000 points as early as 2022. “The move would be consistent with first-quarter levels, although just above our year-end target of 116,000 points,” says the report signed by Ceasar Maasry and Jolene Zhong.

As for positioning for the election, the bank suggests that investors consider domestic cyclical companies. According to the report, the stability in interest rates should help these companies, “a trend probably disconnected with the election result in the very short term, and reasonably insulated from the current significant volatility in global macroeconomic markets.”

*By Augusto Decker, Gabriel Roca, Igor Sodré, Matheus Prado — São Paulo

Source: Valor International

https://valorinternational.globo.com/

Experts agree with IPC Maps data that show post-pandemic habits

09/27/2022


Sales of cell phones and accessories are expected to grow at double-digit levels this year — Foto: Brenno Carvalho/Agência O Globo

Sales of cell phones and accessories are expected to grow at double-digit levels this year — Foto: Brenno Carvalho/Agência O Globo

The consumer market is expected to spend R$175 billion this year on telephone services, packages (TV, Internet, and phone), and the purchase of cell phones and accessories. This represents a potential growth of 10.1% compared to 2021 and 32.53% compared to 2019. The growth is based on current prices and may have a margin of error of 5%.

This is what IPC Maps, a study prepared by IPC Marketing Editora, shows. Experts consider that the data is coherent with the country’s reality.

Marcos Ferrari, CEO of Conexis, which represents the big telcos, said that “the pandemic has changed society’s consumption basket and connectivity has become vital.” Mr. Ferrari, a former secretary of economic affairs during the Rousseff administration, added that “people’s lives, companies, businesses have acquired a new form with the importance of connection.” He recalled that the National Household Sample Survey (Pnad) showed that 98% of people access the Internet via cell phone.

The growth of services is “booming” and will continue, said Vivien Suruagy, head of the federation of telecommunications and information technology network infrastructure (Feninfra). These companies expect to spend nearly R$20 billion this year on infrastructure services for operators, small providers, and suppliers, up 10% to 20% over 2021, according to Ms. Suruagy’s informal analysis.

“I think this growth is totally reasonable,” said Luca Belli, coordinator and professor of the Center for Technology and Society at the think tank Fundação Getulio Vargas (FGV). Mr. Belli recalled that the Pnad, from the Brazilian Institute of Geography and Statistics (IBGE), showed in the last few weeks the increase of connected people and of the use of cell phones and connected TV.

“However, you have to be more critical to understand these statistics,” Mr. Belli said. Not all Brazilians are connected, he added, citing that the lower-income population does not have a connection and is unable to surf the internet. In addition, a good part of Brazilians with access to this type of technology “have very limited bandwidth. There is a digital divide.”

Marcos Pazzini, a partner at IPC Marketing in charge of IPC Maps, said that the main telecom consumption categories were analyzed: landline phone, which has been losing importance for users for years; cell phones, the main device in people’s daily lives; the entertainment-work duo; and chargers, which have gained importance, especially after manufacturers decided to sell them apart from new cutting-edge 5G smartphones – both iPhones and brands that run on Android.

IPC found that telecoms account for 3.3% of household expenses after analyzing water, electricity, telephone, and Internet bills, among others.

The advance in telecom spending is stronger than the expectations for overall household consumption in 2022 in the wider IPC survey, which analyzed 22 sectors. General consumption is expected to draw R$5.6 trillion this year in Brazil, up only 0.92% from 2021.

“Brazil is always among the top countries in terms of consumption, whether of telecommunications services or mobile devices, accessories, and appliances,” said Matheus Rodrigues, a Deloitte partner in Brazil and a specialist in the technology, media, and telecom industry.

The growth in consumption of telecommunications products and services in Brazil had already been noted by Deloitte. The executive cited a recent study held by the company showing that Brazil leads five of six pillars in the industry when compared to the United States, United Kingdom, Germany, and Japan. Brazil is a leader in music streaming, games, social media, Internet navigation, media, videos, shows, and movies. The country is only behind in the segments of live concert streaming and movies at home.

According to IPC Maps data, the growth in telecoms spending this year ranges between 9.51% and 10.6%, depending on the category, compared to last year. Landlines are expected to see the smallest growth (9.51%).

The loss of importance of the landline phone becomes more evident when analyzing the potential spending when looking at the bills in reais in 2022 compared to 2019. Spending on this service dropped on average 80%, to R$10.15 billion, while cell phones are expected to grow 35%, to R$58.4 billion. Telephone, TV, and Internet packages are expected to rise 167% to R$58.4 billion, while cell phones and accessories are expected to increase 229.3% to R$47.9 billion.

“Few people depend on landlines and many who still have them at home do so for convenience because if you cancel the landline in the package, the price goes up,” said Mr. Pazzini. In fact, the sharp decline compared to 2019 follows industry trends, but the growth forecast for 2022 seems illogical. The executive explains that it is a nominal variation and the same is true for cell phones and accessories. “It does not mean that it grew by more than 200% in real terms. Inflation from 2019 to 2022 is expected to reach around 70%,” he said.

The industry’s revenues have been falling in real terms since 2015 due to structural issues. Even with an inflation of 5% to 6% per year, there is positive growth in telecoms, said Fernando Moulin, a professor at Insper and ESPM, and a partner at the consultancy Sponsorb. Mr. Molin, who has already worked for telecom companies, said that the growth indicated in the survey is justified by the change in people’s habits, and the tendency is for this to continue. “Digital transformation points to the North, with cultural, economic, and social changes,” he said.

Mr. Molin agrees that the macroeconomic scenario for 2023 is indeed challenging. But microeconomic conditions do not change, and one of them is habit; people want to be connected.

Cell phones, on the other hand, grew the most because people who used them eventually were forced to buy better devices to work at home and make video calls during the pandemic, Mr. Pazzini said.

Sales of cell phones and accessories are expected to grow at double-digit levels this year, said Reinaldo Sakis, research and consulting manager for consumer devices at IDC Brasil. He linked the increase to the change in the mix of products, higher prices, and higher costs caused by manufacturing problems in Asia passed on to products and components. IDC estimates a 5% drop in units sold in 2022, despite the new 5G technology, because retailers are “well stocked.”

In 2021, IDC saw a 6.1% drop in sales in units compared with 2020. In the second quarter of 2022, there was a 3.1% increase, with the sale of 11.3 million handsets. In revenue, from May to June, cell phone sales grew 14.1% year-over-year, to R$17 billion. In the first half, revenues reached R$36.7 billion, up 16.8% from the first six months of 2021.

“5G growth is exceptional, up over triple digits in units,” said Mr. Sakis. But he added that since this advance occurs over a still small base of 5G smartphones, it will not make a difference this year.

In addition, 1,261 new companies were founded in the telecoms sector since 2021, up 2.2% year-over-year. Now they add up to 57,805, the study found.

Spending rose despite higher unemployment because money flows increased as well, Mr. Pazzini said. The population sought income alternatives, and new delivery and transportation applications emerged, for instance. Ride-hailing drivers and motorcycle couriers depend on the Internet. The reliance on connections has created demand in the industry.

Mr. Pazzini says the upward trend will continue into 2023. “But it won’t last,” warned Mr. Belli, with FGV.

*By Ivone Santana — São Paulo

https://valorinternational.globo.com/

One of the world’s leading energy consultants, he says it is good to the country to be open to the world

09/26/2022


Daniel Yergin — Foto: Divulgação

Daniel Yergin — Foto: Divulgação

Brazil can benefit from a long-term energy outlook that can guarantee revenue even in times of crisis. Achieving this goal depends, however, on having predictable and reliable regulations and policies in order to attract investment.

The view comes from Daniel Yergin, one of the world’s leading energy consultants. Vice-chairman of S&P Global’s board, Mr. Yergin says that, regardless of the outcome of the presidential elections, it is positive for Brazil “to be open to the world.”

Mr. Yergin has published three books – “The Prize” won a Pulitzer Prize in 1992. The most recent, “The New Map”, was released in late 2020 and has not yet been translated into Portuguese. In the book, Mr. Yergin identified that Ukraine could be the issue that would lead to tensions between the West and Russia. On Monday, Mr. Yergin participates, virtually, in Rio Oil and Gas, the largest event of the sector in Latin America.

He said that Brazil needs to pay attention to another issue that he also highlights in “The New Map”: the increased power competition between the United States and China. According to him, the energy market has become more divided and risky after Russia’s invasion of Ukraine and sanctions against Russian energy. “The world will still need oil for a while.”

See below the main excerpts of Mr. Yergin’s interview to Valor.

Valor: What are your conclusions about the current energy crisis?

Daniel Yergin: The global energy crisis started a year ago when markets became tight quickly, and now this crisis has joined a global geopolitical crisis. But it is important to note that there was already a global energy crisis before Russia invaded Ukraine. Prices today are high and what was a globalized market has now become a divided market with more risks. Europe, which was the largest market for Russia’s energy exports, is determined to close the door. Another change is how LNG (liquefied natural gas) has come to be seen as a major strategic asset.

Valor: How does this scenario impact Brazil’s position in the market?

Mr. Yergin: Brazil is an important oil producer, with a location that contributes to global diversification and can benefit from the continuing global demand for oil. But it is important to remember that there will be global competition for attracting investment. Being competitive and reliable will benefit Brazil in the years to come. The world will still need oil for some time to come.

Valor: What does Brazil need to discuss in the energy sector at this time of presidential elections?

Mr. Yergin: I hesitate to give advice in the midst of presidential elections. But I would say that ensuring that Brazil is seen as a predictable and reliable country in terms of regulation and policies will continue to attract investment to the country and keep it competitive. Being “open” to the world is positive. Whoever the president is, Brazil will benefit from establishing itself as a country that looks to the future and thus secures revenues to meet needs even during the inevitable oil market crises.

Valor: What Russia’s role in the energy market will be?

Mr. Yergin: Russia is an energy superpower, but it is wasting political capital and, having lost its most important market, may cease to be one. The country is lacking access to Western technology and investment. And it will still be a superproducer, but production is expected to start to decline. Let’s see what the disruption in the oil market will look like in early December, when sanctions against Russian crude oil go into effect. Where will that oil go? And at what price?

Valor: What has the increased focus on energy security meant for the oil market since the war in Ukraine began?

Mr. Yergin: People had forgotten about energy security. In Europe, it means paying more attention to oil and gas and also to coal. Hydrocarbons supply 82% of global energy.

Valor: What about the effect on renewable energy?

Mr. Yergin: Governments are looking to ensure reliable supply. Renewables will grow fast, which will be a contribution to energy security, but they are also intermittent sources, and reliability is an important requirement. The growth of renewables and electric cars raises new questions about the scale of the minerals that will be needed to serve these markets.

Valor: How important is hydrogen as an energy source?

Mr. Yergin: Hydrogen was barely an industry topic three or four years ago. Now it is being talked about everywhere, both with the aim of using it as a gas in power generation and for heating. Companies are working on it. The European Union says it can have 25% of its energy consumption met by hydrogen by 2050. But it will take three to four years before the dimensions that hydrogen can take as an energy source become clearer. Scale ability still needs to be demonstrated.

Valor: Can hydrogen replace oil and gas in the future?

Mr. Yergin: I think it is less likely that hydrogen will replace oil in the transportation sector. Development funds are focused on electric vehicles. If all plans and scenarios come to fruition, hydrogen could become a major gas for energy purposes. But there is also the possibility of producing hydrogen via natural gas.

*By Gabriela Ruddy — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/