Right-wing surge, re-election trend shape Brazil’s 2024 local races

Polls predict strong right-wing momentum, re-election dominance, and a tight battle among major parties in key Brazilian capitals

10/04/2024

Brazil’s electronic voting machines: the strength of the right is particularly noticeable in capitals and large cities — Foto: Fernando Frazão/Agência Brasil
Brazil’s electronic voting machines: the strength of the right is particularly noticeable in capitals and large cities — Photo: Fernando Frazão/Agência Brasil

If the polls hold true, this year’s municipal election in Brazil is shaping up around three central issues: the electoral rise of the right-wing, a strong trend toward re-election, and the dominance of four political parties: Brazil Union, Social Democratic Party (PSD), Progressive Party (PP), and Brazilian Democratic Movement (MDB). The strength of the right is particularly noticeable in capitals and large cities, especially where the current mayor is politically weak with low pre-campaign approval ratings.

The surge of right-wing candidates is evident in cities like São Paulo, Belo Horizonte, and Fortaleza. In São Paulo and Belo Horizonte, the cities are governed by vice mayors who stepped up due to the death or resignation of the incumbent. Neither Ricardo Nunes (MDB) in São Paulo nor Fuad Noman (PSD) in Belo Horizonte had prior major political contest experience or significant political clout. In Fortaleza, José Sarto (Democratic Labor Party, PDT) faced poor management ratings and his party’s weakening due to internal rifts within the group once led by former Governor Ciro Gomes.

This situation has propelled candidates like Bruno Engler (Liberal Party, PL) in Belo Horizonte and André Fernandes in Fortaleza to the forefront. Pablo Marçal (Brazilian Labor Reconstruction Party, PRTB) is making significant strides in São Paulo. According to a Datafolha poll released on Thursday, Messrs. Nunes and Marçal are both at 24%, statistically tied with Guilherme Boulos (Socialism and Freedom Party, PSOL), who stands at 26%. In Belo Horizonte, Mr. Engler shares the lead with Mauro Tramonte (Republicans) and Mr. Noman, all locked in an unprecedented three-way tie at 21%.

In capitals where the mayor is well-regarded and enjoys solid political backing, re-election appears likely. Eduardo Paes (PSD) in Rio de Janeiro is poised to potentially win in the first round by a narrow margin. João Campos (PSB) in Recife and Bruno Reis (Brazil Union) in Salvador are expected to secure re-election easily. Of the 21 incumbent capital mayors seeking another term, 10 are favorites to win outright on Sunday. Six are competitive for a runoff, and only five seem poised to miss the final round.

Researcher Antonio Lavareda from IPESPE (Institute for Social, Political and Economic Research) noted that the overarching issue of the election is normalcy, despite the potentially disruptive nature of the São Paulo race, the only contest that could impact the 2026 presidential election. Across the capitals, the pro-incumbent trend seen in 2020 continues, when only one of 13 eligible mayors—Marchezan Júnior in Porto Alegre—failed to reach a runoff.

The Brazilian electorate’s shift to the right has been growing since 2016 and solidified this year, not only in the mentioned capitals. Right-wing candidates are defined as those running under PL, PRTB, Brazil Union, PSD, PP, Avante, and Republicans, without alliances with left or center parties. This trend has now expanded, and by Thursday night, the right was leading in 16 capitals and could potentially win in up to 23.

This right-wing ascendancy is mirrored in other municipalities and, combined with the trend toward re-election, bolsters parties currently holding numerous city halls: PSD, Brazil Union, PP, and MDB. These parties are likely to elect more congresspersons in 2026, potentially joined by Republicans. These parties, which control the leadership of both the Senate and the Lower House, are often labeled as the “Centrão,” a cluster of center-to-right parties that has been part of every government since democratization—and a label they dislike.

The PL of former President Jair Bolsonaro is also expected to be among the election’s big winners, although it is not part of the “Centrão.” The party may not reach its goal of 1,000 mayors as set by its leadership, despite controlling the largest share of the government funds provided for the parties, but it should still strengthen its bargaining power for leadership succession support.

Mr. Marçal openly shares his presidential ambitions and has mentioned occasionally his intent to form a new party. Even if he doesn’t win in São Paulo, his local opponents believe he will have enough political capital to pursue this project. Former President Bolsonaro’s supporters went against his endorsement in eight capitals, including São Paulo. Mr. Bolsonaro is no longer the undisputed leader of the right and will lose control over this field if he remains ineligible in 2026.

And what about the left? The outlook is less promising, but expectations were already tempered. President Lula actively campaigned only in São Paulo. The Workers’ Party (PT) refrained from fielding candidates in several capitals, and President Lula’s supporters scattered, following the party’s guidance in only a minority of cases. The governing coalition chose not to challenge local dynamics. The PT is optimistic about Fortaleza and Teresina, where Evandro Leitão and Fábio Novo have a chance to lead in the first round.

There is uncertainty about reaching a runoff in Porto Alegre, where Maria do Rosário (PT) faces a threat from Juliana Brizola (PDT). Even if Ms. Rosário prevails, the likelihood of preventing Sebastião Melo’s (MDB) re-election is low, as he recovered in polls following the impact of May’s floods in Porto Alegre. PT candidates may also reach runoffs in Goiânia and Natal but face bleak prospects for the decisive round.

Governors’ influence is stifling national polarization in certain areas. The clearest example is in Belém, where Mayor Edmilson Rodrigues (PSOL) is poorly rated, paving the way for Éder Mauro (PL). However, Belém will host COP 30 in 2025, promising substantial economic returns, and the governor’s candidate, Igor Normando (MDB), is gaining traction in polls.

In Goiânia, Governor Ronaldo Caiado (Brazil Union), eyeing a presidential bid, brought retired former legislator and businessman Sandro Mabel back to counter the PL’s rise. The backdrop is control over the race for Goiás’s gubernatorial succession. Mr. Mabel leads, but PL candidate Fred Rodrigues is gaining ground in polls.

The São Paulo situation is more complex. Governor Tarcísio de Freitas (Republicans) intervened in the capital’s election to support Ricardo Nunes’ re-election upon recognizing Mr. Marçal’s strength. The underlying issue, never admitted by the governor, is the leadership of the right. Mr. Tarcísio’s involvement coincided with Bolsonaro’s disengagement from the São Paulo campaign. It’s a risky move. If Mr. Nunes advances to the runoff, it will be a victory for Mr. Tarcísio, not Mr. Bolsonaro. If the mayor is eliminated, Mr. Tarcísio will face a difficult position.

He would have to support Mr. Marçal against Mr. Boulos, risking his status as a right-wing leader. But if Mr. Marçal wins, Mr. Tarcísio will not be the main figure.

In the state’s countryside, the contest among the group led by Secretary Gilberto Kassab, PSD’s national president, Republicans, and PL led by former deputy Valdemar Costa Neto leans towards the first in crucial cities like São José dos Campos and Ribeirão Preto. In Guarulhos, the situation remains uncertain. This local struggle fuels Mr. Bolsonaro’s supporters’ national offensive against PSD, amplified on social media.

*By César Felício — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Dollar outflows from bets, crypto put pressure on Brazil’s real

Economists say current account deficit is underestimated because of the use of digital currencies as payment methods

10/04/2024

Iana Ferrão — Foto: Rogerio Vieira/Valor
Iana Ferrão — Photo: Rogerio Vieira/Valor

The rapid outflow of U.S. dollars from Brazil due to purchases of crypto assets and sports betting, or “bets”, has caught the attention of economists and foreign exchange traders. Although it has not yet surpassed other capital inflows enough to pose an immediate threat to the country’s external accounts, there is growing concern in the market that, in the not-too-distant future, this outflow could affect both external accounts and the local currency, which is already feeling the strain from such outflows.

Central Bank data shows that the outflow of dollars through Brazil’s financial account remains high this year, amounting to around $48 billion through August, despite an improvement in capital flows into the Brazilian stock market in the early second half of the year. When analyzing the balance of payments, one notable factor is the growing outflow linked to crypto assets and recreational services (which include bets). Together, these categories reached $14.7 billion from January to August, equivalent to 30% of the net financial account result during that period.

“Although Brazil has low external vulnerability, there is no strong net inflow into the country,” said Iana Ferrão, an economist at BTG Pactual. The discrepancy between the dollar flows and the external accounts is related to how crypto assets are accounted for. The financial account captures these outflows, while the current account no longer includes them, following a methodological change by the Central Bank in line with International Monetary Fund guidelines.

“If you look at the overall balance of payments and factor in crypto assets, the net result is lower. However, the market tends to focus solely on the current account deficit and how it is financed by Foreign Direct Investment (FDI),” Ms. Ferrão explained.

Currently, dollar inflows from FDI into Brazil are sufficient to comfortably cover the current account deficit (which includes the trade balance, services, and primary and secondary income). However, if crypto assets are considered, the outlook changes. Central Bank data shows that in the 12 months ending in August, FDI inflows totaled $70.6 billion, more than enough to cover the $38.6 billion current account deficit. But if the current account deficit is combined with the outflow from crypto assets, the result would be a negative flow of $54.8 billion, reducing the buffer provided by FDI.

“It’s also important to consider that the current account deficit has increased due to higher imports, driven by a stronger economy. Although exports remain strong, the trade surplus is not as large as last year,” said Luís Afonso Fernandes Lima, head of research at Mapfre Investimentos. “The overall picture still looks good, but there’s definitely a problem.”

Mr. Lima added that it is difficult to pinpoint what drives the outflow of crypto assets. “There’s no way to predict what will happen. It’s not like public bonds, where interest rates play a key role. There are different factors at play. This adds uncertainty to the balance of payments and, consequently, to the exchange rate, which could become more volatile as a result.”

One explanation for the sharp increase in outflows related to cryptocurrencies is their use not only as investments but also as payment methods. “We know that some online betting companies and platforms facilitating international transfers, such as for card payments during travel, are using crypto assets for payments because the transactions are faster and cheaper,” said Ms. Ferrão from BTG.

A common example of such usage involves stablecoins, cryptocurrencies pegged to traditional currencies like the U.S. dollar. Pedro Guimarães, product leader at Ouribank, noted that companies have approached him to conduct foreign exchange operations using stablecoins instead of traditional methods. “The amount spent on cryptocurrencies in the capital account is too high to be attributed solely to speculation or dollarization with stablecoins. It could be related to other factors, such as the growth of the betting market or companies operating in Brazil but headquartered abroad,” he argued. “Some companies might be creating their own payment rails for international transactions using crypto.”

For Ms. Ferrão, if companies are using crypto assets for payments, whether through betting or international transfers, the current account deficit is likely underestimated. “These are capital flows entering through crypto assets that should be categorized as recreational services or travel.” Ms. Ferrão said that a potential indication of this underestimation is that the number of Brazilians traveling abroad has returned to pre-pandemic levels, while the balance of payments data for international travel remains far below pre-pandemic figures.

Other factors also help explain the discrepancy between the volume of dollars entering the country and the exchange rate. One key factor is that some capital entering through FDI may be hedged via derivatives, which could mitigate the impact of dollar inflows on the local currency. A major bank treasury executive, speaking anonymously, expressed concern about capital outflows through crypto and bets, particularly because the counterpart, the FDI, does not always support the currency.

“We know that many companies investing in Brazil hedge their capital in derivative markets. That’s why I’m skeptical about whether all this FDI is benefiting our currency,” he said. Since the exchange rate is formed first in the futures market and later transmitted to the spot market, hedging in derivatives may reduce the effect of dollar flows on the commercial dollar rate.

The executive also noted that while new regulations for online betting companies might reduce capital outflows from bets, the same is unlikely for cryptocurrencies. For now, there are no rules that could restrict this outflow, and many Brazilians are still unfamiliar with crypto assets. Therefore, he believes there is significant growth potential, as more people may gain access to digital currencies in the future.

However, not everyone sees capital outflows as a problem. Lívio Ribeiro, a partner at BRCG and associate researcher at FGV/Ibre, does not view the rise of crypto assets and online betting as a major issue, except in cases where illegal activities might be involved.

Mr. Ribeiro acknowledged that the trend of buying crypto assets and using online betting in Brazil is growing in the long term. However, he believes the main issue with bets is potential fund misappropriation, and with cryptocurrencies, the possible concealment of assets.

“Brazil stands out as a country where the middle and upper-middle classes are buying cryptocurrency instead of investing in fixed-income funds, for example. The question is whether the surge in crypto assets is purely due to Brazilian investment preferences or if it’s being used to hide the origin of funds,” Mr. Ribeiro concluded.

*By Arthur Cagliari, Ricardo Bomfim — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Brazil’s Foreign Ministry dispatches team to support embassy in Lebanon

Government launches repatriation effort for Brazilians following Israel’s military offensive against Hezbollah

10/03/2024

People clear debris from the street in a residential neighborhood of Beirut, Lebanon, after an Israeli attack — Foto: Hussein Malla/AP
People clear debris from the street in a residential neighborhood of Beirut, Lebanon, after an Israeli attack — Photo: Hussein Malla/AP

Brazil’s Ministry of Foreign Affairs has decided to send a team to bolster the Brazilian embassy in Lebanon. This move comes as the government organizes an operation to repatriate Brazilians wishing to leave the country in the wake of Israel’s air and ground offensive against Hezbollah, the Lebanese Shiite group.

According to the ministry, two diplomats and a Foreign Affairs staff member will be dispatched to Lebanon to assist the embassy in managing the logistics for evacuating Brazilian residents in the area.

The topic will be addressed in a meeting scheduled for Thursday at 4 p.m., involving Foreign Minister Mauro Vieira, Defense Minister José Múcio, and Air Force Commander Lieutenant Brigadier Marcelo Kanitz Damasceno.

As of now, the Foreign Ministry denies that all arrangements are finalized for the Brazilian delegation to enter Lebanese territory and facilitate the departure of Brazilians who wish to leave.

As reported by Valor on Wednesday, Minister Múcio had to cut short his five-day vacation in the United States to return to Brazil to address two urgent issues: the repatriation of thousands of Brazilians in Lebanon amidst the escalating Middle Eastern conflict and technical issues with one of the presidential aircraft’s engines, currently under inspection in Mexico City.

The defense minister confirmed to Valor on Wednesday that he was en route back to Brazil and explained that he plans to meet with President Lula on Thursday to discuss these matters. His return ticket, according to his advisory team, was already booked prior to the technical fault with the presidential plane.

His vacation began on Monday (September 30) and was supposed to last through the weekend, but President Lula requested his immediate return to personally oversee the repatriation efforts.

*By Renan Truffi, Valor — Brasília

Source: Valor International

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Americanas committee uncovers further signs of discrepancies

Suspicions involve product sales between the group’s physical and digital divisions, expenses recorded outside actual periods

10/03/2024

Committee indicates that other areas require further investigation — Foto: Marcia Foletto
Committee indicates that other areas require further investigation — Photo: Marcia Foletto

The independent committee hired by Americanas to investigate the retailer’s financial discrepancies has discovered additional areas of concern within the company’s accounting practices. These suspicions include transactions between the physical and digital divisions of the group and expenses allegedly recorded outside the periods in which they occurred.

The primary issues remain the improper accounting of reverse factoring operations (a form of supplier financing) and the misuse of cooperative advertising funds (VPC), including falsified contracts. However, the committee indicates that other areas require further investigation.

During the investigation, “potential inconsistencies” were noted in transactions between Lojas Americanas and B2W, the group’s digital arm before their merger. The committee also found evidence of expense deferrals and pursuing “unsubstantiated services” to artificially enhance the company’s results.

The independent committee presented its findings—in a report reviewed by Valor—to the retailer’s board of directors in mid-July. Americanas’s accounting inconsistencies, initially unveiled in January 2023, amount to over R$25 billion.

The committee found documents indicating communication among B2W employees referencing “risks” associated with related-party transactions, such as cash outflows from Lojas Americanas and inflows to B2W. Investigators recommend examining potential fictitious merchandise transfers and sales between the companies.

Financial statements and reference forms from Lojas Americanas and B2W reveal numerous joint transactions, including shared expenses for the same headquarters, sales between the companies, and private issuances from B2W subscribed by Lojas Americanas.

The committee’s data collection also uncovered notes from an executive regarding potentially deferred expenses (recorded after they occurred) and the pursuit of “unsubstantiated services” to enhance results at Lojas Americanas and Americanas (formed in 2021 through the merger of the group’s digital and physical branches). The report does not specify the time frame or individuals involved.

Additional “levers” to improve results were identified, without assurance of the absence of irregularities in the corresponding adjustments. Possible risks in B2W’s operations include cashback programs (partial purchase refunds as discounts to customers), taxes, expense reversals, reclassifications between costs and expenses, and freight provision accounts.

Another area of concern involves the “MP do Bem”—a presidential decree enacted into law in 2005, which regulated tax incentives for IT products. Details on this issue were not provided.

Similar aspects are highlighted in Lojas Americanas’s business (deferred expenses, depreciation, reclassifications, taxes, and freight). Further investigation is again recommended.

The report suggests possible reclassifications of values between balance sheet lines and the results of Lojas Americanas and B2W, such as in inventory balances and deposits in court for liability accounts.

The committee identified communications among employees discussing potential adjustments in provisions for inventory obsolescence and stock for Americanas.

In reverse factoring operations, analyzed materials suggest that the company reimbursed suppliers for the discount rate charged by banks on the factoring of receivables.

The reimbursements reached “predominant” levels, both in value and volume, according to the report, and were not fully recorded as financial expenses in the financial statements. The investigation found R$3.4 billion in unrecorded financial expenses related to reimbursements up to September 30, 2022.

The reverse factoring agreements mostly involved overdue product purchase invoices, which theoretically would not qualify for advances. The investigations do not indicate supplier involvement in this scheme, nor that they were aware of it.

Two suppliers still working with Americanas claim that overdue invoice reverse factoring was primarily a B2W practice. “They delayed payments and everyone knew selling to them meant waiting a long time to get paid. To compensate, they bought in large volumes and also reimbursed part or all of the reverse factoring discount rate,” says the general counsel of a manufacturer selling to the website.

According to her, invoice payments were blocked, suppliers pressured, and payment was released through reverse factoring with a discount rate refund. “You want to get paid, so you accept the terms, but it was suspicious. The market questioned why they carried this financial expense. Today we know the expense wasn’t fully recorded.”

A second supplier states that B2W delayed invoices but purchased 10% to 15% more than other retailers on average.

The documents reveal an internal classification of these transactions as “good” or “bad” for monitoring by the former executives, currently under investigation, considering their financial outcome.

A “good” transaction had a “positive spread,” resulting in financial income or extended payment terms without recording reimbursement financial expenses. A “bad” operation with a “negative spread” led to expense payment.

When contacted, Americanas stated that “all recommendations made by the independent committee have already been thoroughly investigated, analyzed, and reflected in the presented financial statements.”

“The company emphasizes that the committee’s findings confirm, through independent means, what has been disclosed in the criminal investigation so far. It reaffirms its primary interest in clarifying the facts and pursuing legal accountability for all involved,” the company said.

By Adriana Mattos, Talita Moreira, Nelson Niero — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Government releases list of 192 authorized betting platforms

Sports betting sites that have not registered will be taken down in the coming days

10/02/2024

Government releases list of 192 authorized betting platforms
Government releases list of 192 authorized betting platforms — Photo: Pixabay

The Ministry of Finance released on Tuesday a list of online betting companies authorized to operate in Brazil. Nationwide, 89 companies, owning 192 platforms, have applied for approval from the ministry to operate in the country and are thus in compliance. The government also disclosed the names of six companies registered regionally, with states, each one responsible for a single website. Of these, five are from Paraná and one from Maranhão.

These companies will be authorized to operate in Brazil until December 31. At the end of this transition period, the Ministry of Finance will release the final list of companies and websites that will be authorized to operate from January 1, 2025, when Brazil’s regulated betting market will commence.

The ministry said that websites not included in the list can no longer accept bets. These sites will remain online for the next ten days “solely to facilitate bettors’ requests for the return of funds deposited in their names with these companies,” according to an official statement.

The announcement also said that, from October 11, these sites will begin to be taken down with the assistance of telecoms regulator ANATEL. “Even after this date, it will remain the responsibility of the website operators to ensure that bettors can withdraw any deposits they are entitled to,” the statement said.

The list was published after a day of meetings at the ministry’s headquarters in Brasília. In the morning, Minister Fernando Haddad met with representatives from the advertising sector to align guidelines for betting site advertisements.

According to Mr. Haddad, it’s important to be mindful of the negative effects that can be caused by sports betting and to address the issue from a social perspective. “No one makes money from gambling. People lose money. It’s a game of chance,” the minister said on Tuesday.

After the meeting at the Ministry of Finance, the president of the National Council for Advertising Self-Regulation (CONAR), Sérgio Pompilio, said that, in cooperation with the government and the advertising market, they will guide betting platforms towards “more controlled and healthier practices” for consumers.

Mr. Pompilio also said that Conar has been holding meetings with betting associations for almost a year. “Conar’s self-regulation principles are already part of the addendum [to the ministry’s decree] addressing advertising and are already in effect,” he said.

He added that the regulation of the sector—a process that began last year with the introduction of a bill on the subject—is “fundamental.”

Sports betting platforms began to be legalized in 2018, but the regulation process has been delayed. Last year, Congress passed a bill to regulate the sector. Throughout this year, the Ministry of Finance issued decrees detailing these rules. The process is expected to be completed next year.

Last week, a study by the Central Bank revealed that Brazilians spend between R$18 billion and R$21 billion per month on sports betting. The discovery of the market’s size has reinforced discussions on enhancing regulation, which also focuses on combating the use of platforms for illegal activities, such as money laundering.

The National Association of Games and Lotteries also advocated for regulation and announced measures to combat gambling addiction on illegal betting websites. “Legalization is the way forward, there’s no turning back. It’s the illegal sector that’s causing this mess and generating insecurity in the market,” said Plinio Lemos Jorge, president of the association.

In partnership with the institutes Somente and Belezinha, the association has started offering medical treatment for people addicted to gambling, a disorder known as ludopathy. The pilot project is expected to assist 21,000 people.

On another front, part of the regulation process is facing legal challenges. The Rio de Janeiro State Lottery (LOTERJ) obtained an injunction from a federal court to ensure that its licensed betting websites continue to operate and are free to advertise throughout the country, without the risk of being blocked.

In practice, companies licensed by LOTERJ will continue to operate nationwide—there will be no restriction if a player from Rio de Janeiro, for example, is traveling and places a bet in another state. LOTERJ-licensed companies will also not be blocked even if they are not authorized by the Ministry of Finance’s Secretariat of Prizes and Betting. The federal government is seeking to overturn the ruling in court.

See the list of authorized sites

Authorized websites
Betano
Superbet
Magicjackpot
Luckydays
ReidoPitaco
Sportingbet
Betboo
Caesar’s
JogaBet
Betnacional
Mr. Jack Bet
Pagbet
KTO
Betsson
Galera Bet
SportyBet
EstrelaBet
Betfair
PokerStars
7 Games
Betao
R7
Novibet
SeguroBet
ijogo
fogo777
p9
9f
6r
bet.app
Bet365
Aposta Ganha
Brazino777
Betway
Jackpot City
Spin Palace
SeuBet
H2 Bet
Vbet
Vivaro
Casa de Apostas
Bet Sul
BetFast
Faz1bet
Tivobet
SupremaBet
MaximaBet
XPGames
Betesporte
Lance de Sorte
King Panda
Leo Vegas
Royal Panda
Betspeed
Sorte online
Lottoland
ArenaPlus
PixBet
FlaBet
BetdaSorte
Rio Jogos
LottoMaster
betagora
Playpix
Dupoc
Apostou
b1.bet
BRBET
Bet Gorillas
BateuBet
Bet Warrior
pimile
Sorte na Bet
Bet Fusion
Bandbet
vivasorte
Afun
Blaze
JonBet
Bet7k
Cassino Pix
Bet Vera
Cbet
Vertbet
Dashboard Fund
UPBETBR
9d
Wjcasino
Betmotion
Apostou Ganhou
Alfa.bet
MMABet
BR4Bet
GoldeBet
lotogreen
Bolsa de Aposta
Fullbet
BetBra
Pinnacle
MatchBook
Verdinha
betboom
BetFive
IO
B2X
JetBet
SorteBet
Pinbet
Aposta 1
Apostamax
InplayBet
GingaBet
QGBet
Bacana Play
Play Uzu
BetCopa
Aposta365
multibet
acelerabet
Play7
Zedocash
Bankbet
Amabet
BetFortuna
Fortuna Play
LampionsBet
Responsa
Joga Limpo
Odd Fair
Única Bet
Bicho no Pix
Claro Bet
FazoBetAí
oleybet
betpark
Meridianbet
NossaBet
Spin365
Mundifortuna
MetBet
EsportivaBet
MetGol 100%
Tropino
Anima Bet
Esporte 365
Bet Aki
Jogo de Ouro
GeralBet
Betinha
Zona de Jogo
ApostaOnline
OnlyBets
Logame
LogFlix
Liderbet
Bullsbet
Elisa.bet
Pagamentos.bet
Lotoaposta
Davbet
playbonds
Bet.bet
1xBet
1xcassinos
Apuesta360
Rivalo
A247
Receba.com
Latinbet
Lumosbet
MC Games
MonteCarlosbet
MonteCarlos
Betmillion
ApostaTudo
Betsat
Zbet
Xbet
Kbet
PUSKÁS BET
Cibet
Big Win Free
GRXBet
BRX Gaming
Ricobet
Parimatch
Megaposta
Betex
Lanistar
Marjosports
Hanzbet
Chegou Bet
By Guilherme Pimenta, Gabriela Pereira, Flávia Maia, Helena Benfica, Valor — Brasília and São Paulo

Fonte: Ministry of Finance

https://valorinternational.globo.com/business/news/2024/10/02/government-releases-list-of-192-authorized-betting-platforms.ghtml
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Former XP partner launches AI-driven asset management firm

The new company, Reinvent, is the first in Brazil to blend human expertise with artificial intelligence, leveraging AI for operational and supporting functions

10/02/2024

Laio Santos — Foto: Divulgação
Laio Santos — Photo: Divulgação

Laio Santos, former CEO of brokerage firm Rico and ex-partner at XP Investimentos, is launching a wealth management firm targeting mid-ticket investors—those he believes are currently underserved by high-income segments of banks and digital platforms but do not yet have the volume for private banking. With this goal in mind, Mr. Santos, along with two other partners—Luis Souza and Heucles Bianco, both also former XP executives—turned to generative artificial intelligence as a way to scale the business without compromising service quality.

Named Reinvent, the asset manager is the first in Brazil to combine human expertise with artificial intelligence, which is used for operational and complementary functions such as portfolio monitoring, back-office operations, and client support, Mr. Santos said.

“AI is used to ensure that the time an advisor spends with a client is as well-utilized as possible. Human interaction is still necessary. If we were just AI, a chatbot, or an avatar, the client would probably invest R$1,000 to test it out. Most people today don’t want to deal with a ‘robo-advisor’ offering a portfolio that doesn’t match their needs just because they fit a certain profile. Clients want quality service,” he said.

The business model follows that of wealth management firms, charging a flat management fee of 0.7% on client assets. The minimum investment is R$100,000. The firm does not work with rebates or commissions for product distribution. “We don’t pretend we aren’t charging fees. Clients know exactly what they are paying,” Mr. Santos explained.

Reinvent is initially connected with XP, and the team is currently integrating BTG Pactual as well. Looking ahead, they aim to work with products from Nubank and Itaú. “We’re open. We have no exclusivity or ties to any one institution. This is important because it allows us to choose the best institution for the client’s needs, rather than the one we have a better relationship with,” Mr. Santos said.

The generative AI technology monitors everything happening in the markets 24/7, a pace that human advisors struggle to keep up with. With this information on hand, the AI can compare it to the client’s portfolio and goals. “This enables us to be proactive, knowing what’s happening before the client even notices an issue or opportunity.”

After leaving XP, Mr. Santos took a year off, fulfilling his non-compete agreement and exploring his next move in the financial market. He shared that at Rico, where he was CEO for three years, he had a team of 20 advisors managing a portfolio of 1 million clients. “The challenge was always figuring out how 20 people could make a difference in the lives of 1 million investors,” he said.

In the investment market, Mr. Santos explained, it’s difficult for an advisor to provide quality service to more than 80 clients. “It’s widely accepted that it’s economically unfeasible to personally manage clients with assets between R$100,000 and R$500,000. That’s just how the market works. But these clients are already receiving excellent service in other areas—they drink fine wine, go to great restaurants … yet in the investment market, they are still underserved.”

Mr. Santos believes that technology is now making it possible to expand service capacity. The estimate is that advisors can save at least three hours of operational work per day using AI. For example, while onboarding with a traditional advisor takes 120 minutes, with AI it can capture the essential information in just 20 minutes.

The firm caught the attention of venture capital investors like Canary, which led a R$5 million seed round along with angel investors from the financial market.

By Toni Sciarretta — São Paulo

Source: Valor Iternational

https://valorinternational.globo.com/
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Belgium’s Oleon acquires Brazilian A. Azevedo Oils

Belgian Company, controlled by France’s Avril, cut the deal for an undisclosed amount

10/01/2024 01:47 PM  Atualizado 01/10/2024

Oleon, a Belgian subsidiary of the French group Avril and a global leader in natural-based oleochemicals, has finalized the purchase of Brazil’s A. Azevedo Oils, a prominent manufacturer of vegetable oils and its products—particularly those derived from castor beans. The companies did not disclose the transaction amount but noted that the family that previously owned A. Azevedo will retain a significant minority stake.

This acquisition marks Oleon’s entry into the Brazilian market, aligning with its strategy for global expansion and sustainable growth. A. Azevedo, which was advised by IGC Partners during the sale process, has an annual revenue of $80 million and employs 250 people. It will now be part of a company that generates €1 billion annually, with 1,200 employees and manufacturing facilities in seven countries, including Brazil.

The Brazilian company can produce 75,000 tonnes of vegetable oils per year, primarily from palm, soy, and especially castor beans. Its products serve as raw materials for cosmetics, packaging, fertilizers, cleaning products, and paints. Some of its production, carried out in its 30,000-square meter industrial facility in Itupeva, São Paulo, is already exported to the United States, France, and Latin American countries such as Argentina, Chile, Colombia, and Peru.

Oleon CEO Moussa Naciri said the acquisition gives Oleon access to the South American market, while the Brazilian company gains the opportunity to enter new markets.

“We can use A. Azevedo as a platform to develop Oleon in South America. And we can leverage Oleon to enable A. Azevedo to grow internationally,” Mr. Naciri said, adding that products related to the castor bean supply chain are “extremely important” in various applications.

Mr. Naciri cited examples such as automotive oils used in several vehicles in Europe, as well as pharmaceutical and cosmetic products. “We take these natural materials and transform them into high-value solutions,” he said, adding that while environmental discussions are relevant, Oleon’s products are competitive without subsidies. “We are in the market not just because we are green. We are there because we provide functionalities that are crucial for the product,” he said.

The Avril group, which controls Oleon, is the fifth largest agricultural group in France, operating in 19 countries, with annual revenues of €8 billion and 8,000 employees. Avril CEO Jean-Phillippe Puig noted that the company is managed through a fund created by farmers who still control the company, aiming to increase the group’s annual earnings by €200 million by 2030.

*By Rafael Rosas — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/
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Fixed income wins, but outlook for stocks improves

For asset managers, U.S. rate cuts and China’s stimulus package could lead to stock market recovery

10/01/2024

Marcelo Mello — Foto: Divulgação
Marcelo Mello — Photo: Divulgação

September felt like all of 2024 unfolded in a single month. It featured the expected rate cut by the U.S. Federal Reserve, a hike in Brazil’s Selic policy rate, and even stimulus measures for China’s economy. The renewed monetary tightening in Brazil kept fixed income in focus, making it the top performer for the month, with a CDI (Interbank Deposit Certificate) return of 0.84%. For the quarter, the rate stood at 2.63%. Meanwhile, after a strong August where Brazil’s benchmark stock index Ibovespa rose by 6.54%, it ended September down 3.08%, with a quarterly decline of 6.38%. The U.S. dollar declined by 3.30% against the real in September and 2.53% over the quarter.

“The best asset of the month was the CDI, outperforming the Ibovespa, real estate investment funds, and a basket of inflation-linked securities,” said Marcelo Mello, CEO of asset manager SulAmérica Vida, Previdência e Investimentos. He mentioned that fixed income attracted over R$43 billion in September, mainly into credit funds, while multimarket funds saw outflows of R$40 billion and equities lost R$2 billion. On the other hand, the pension funds segment gained R$4.5 billion.

Mr. Mello noted that both the rate cut in the U.S. and Brazil’s monetary tightening had been anticipated, with the key question being the pace. The Federal Reserve, he explained, started with a stronger approach, with its base rate potentially reaching 3.5% this year, while Brazil’s tightening began more cautiously, with a 25 basis-point hike but a tougher stance, leading the market to project 50 bp increases at each meeting. SulAmérica Vida expects the Selic rate to reach 12.5% per year by the end of the cycle.

“We began the year expecting more rate cuts in Brazil, which would have opened a window for IPOs, but the opposite happened,” Mr. Mello summarized. However, while the tighter monetary policy directly impacts Brazilian assets, it doesn’t rule out a stock market recovery. The monetary easing in the U.S. opens the door for a rebound, with the expected return of foreign investor inflows, along with the boost from China’s stimulus package. “China’s stimulus measures provide a lift to commodities, although it’s still uncertain if they’ll be enough,” Mr. Mello pointed out.

For Tiago Cunha, equity manager at Ace Capital, the domestic environment offers little incentive for riskier investments, and the government’s fiscal policy signals don’t inspire confidence. However, the external outlook—with moderate U.S. economic growth, falling interest rates, and China’s stimulus package—is starting to influence foreign investors’ portfolios.

“Everyone was expecting the Chinese stimulus package, but there was no clear indication of when it would happen, which is why all positions related to the country were at historic lows. Now we’re seeing a boost in these positions, especially through emerging markets funds, and Brazil ends up benefiting from this,” Mr. Cunha said.

Mr. Mello, of SulAmérica, noted that while equities aren’t very attractive to domestic institutional investors, he also sees international flows coming into emerging markets as U.S. rates fall. “For the stock market, what’s most relevant isn’t China, but U.S. rates,” he said. “Stocks are trading at a discount, and companies have been reporting satisfactory results. If the U.S. monetary policy direction is confirmed, we could see foreign inflows.”

Mr. Cunha, from Ace, also mentioned that foreign investors are puzzled by Brazil’s divergent path on interest rates compared to the rest of the world. “They struggle to understand, especially given that the inflation we’re trying to control isn’t far off target. It raises questions about how often the market consistently overestimates inflation and underestimates economic activity.”

For him, since the extent of the tightening cycle is unclear, it’s also impossible to predict when rate cuts will resume. “If it depends on anchoring expectations, there’s the additional challenge of aligning fiscal policy with this.” Amid all volatility in expectations, the IMA-B 5+ (an index reflecting the performance of government bonds indexed to the IPCA official inflation with maturities over five years) fell 1.42% in September, while the IMA-B 5 (up to five years) rose 0.4%. Over the quarter, the indexes saw gains of 2.55% and 1.92%, respectively.

In equities, indexes linked to domestic activity, given the forecast of a stronger Selic rate hike, fell more than the Ibovespa: the Small Caps index dropped 4.41%, and the Icon retail index declined 4.71%. “The economic data has been strong, and we want to be more optimistic, but we’re being cautious,” said Marcelo Nantes, head of equities at ASA.

Mr. Nantes recalled that August was a good month for stocks tied to the domestic economy, but the firm thought equities had risen too much and started September more cautiously. “New money for the stock market is coming from foreign investors because it’s very difficult for pension funds to invest with interest rates at this level. And retail investors are focusing on tax-exempt securities.”

He said that with the results of China’s stimulus package still unknown, the asset manager is “more in wait-and-see mode than willing to take a gamble,” which is why they kept a small exposure to commodities and reduced their position in companies tied to Brazil’s GDP. The healthcare sector, as well as shopping malls and retail in general, are part of this group. “We like these sectors and made only small adjustments. We also doubled the fund’s cash allocation.”

There were no changes in the electricity sector exposure, where they remained optimistic, and the telecommunications industry allocation grew. “China’s move has turned into a positive risk, and Brazilian activity remains strong, but the fiscal issue is the elephant in the room. If foreign flows return, we’ll revise our view.” At Ace, they maintain a bullish position on commodities while increasing their exposure to technology companies overseas.

The bet on Brazilian stocks isn’t significant at G5 Partners, said Fernando Donnay, partner and head of fund-of-funds at the multifamily office, with an allocation between 5% and 10%, considered neutral. The largest portion of its equity portfolio is invested overseas, where stocks may not be as cheap as in Brazil, but it focuses on global companies. On the other hand, in fixed income, the firm is reducing its allocation, as the risk premiums on private securities continue to shrink.

Mr. Mello, from SulAmérica, also pointed to the ongoing reduction in spreads as a challenge for credit allocations. He noted that some asset managers are starting to limit inflows into their funds to maintain portfolio quality, especially those with daily liquidity.

He believes that as these fundraising limits expand, the market will stabilize. SulAmérica itself has already closed its daily liquidity funds, and on platforms, they’re working to encourage funds with 60 and 90-day maturities, which allow for the pursuit of more competitive rates.

Gabriel Esteca, co-founder and head of infrastructure at Bocaina Capital, doesn’t foresee a change in the high demand for infrastructure bonds, which offer tax exemptions for individual investors. He has been targeting smaller issuances, up to R$100 million, which the firm originates to secure higher rates. “There’s no visible trigger in the short term due to the high demand for credit.”

*By Liane Thedim — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/
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Selic rate hike to hit indebted companies harder

While many firms refinanced debt during lower spreads, several sectors remain highly leveraged

10/01/2024

Vivian Lee — Foto: Carol Carquejeiro/Valor
Vivian Lee — Photo: Carol Carquejeiro/Valor

The ongoing Selic benchmark interest rate hike, which began in September, is expected to impact the financial performance of companies raising funds through the debt market, particularly those in highly leveraged sectors such as retail, car rentals, and healthcare. However, the fallout is likely to be less severe than in 2021, when the rapid increase in Brazil’s policy interest rate to 13.75% from 2% over just a year strained these companies’ ability to manage their debt costs. This time, many firms acted preemptively, capitalizing on strong demand for bonds to refinance at lower spreads and extended maturities.

“Some companies that access capital markets have issued new debt, allowing them to swap higher-cost obligations for lower spreads and longer terms, reducing short-term rollover risks,” explains Vivian Lee, partner and manager at Ibiuna. “But for those already facing liquidity pressures, the rate increase is anything but trivial.”

A report from the SWM Group obtained by Valor highlights that certain cyclical sectors, such as car rentals, food and textile retailers, and healthcare providers are in a more precarious leverage position. “With the rise in the Selic rate, these companies are seeing either an increase or, at best, stabilization of leverage due to higher financial costs,” says Odilon Costa, SWM’s fixed income and corporate debt strategist. “Investors need to be cautious, as the credit fundamentals of some issuers have become more concerning. The risk-return balance of these assets deserves closer attention.”

Mr. Costa notes that rental companies are facing heightened leverage due to a combination of fleet maintenance and expansion needs, coupled with a decline in used vehicle prices. Meanwhile, food and textile retailers have benefited from more robust consumer spending but are still grappling with tight credit conditions and stiffer competition. For healthcare companies, including hospitals and laboratories, costs have eased somewhat, though payment delays from operators remain a significant challenge, according to the SWM report.

With profit margins as low as 5% to 10% and high levels of debt, any increase in the Selic rate could significantly erode companies’ net results, says Rosana Pádua, board member of the Brazilian Institute of Finance Executives of São Paulo (IBEF-SP). “In some cases, companies don’t even have enough margin to service their debt. That’s why many have struggled since rates increased and have filed for court-supervised reorganization.”

From the funding perspective, the latest Selic adjustment to 10.75% per year from 10.5% hasn’t impacted companies’ decisions to issue bonds. According to Miguel Diaz, Santander’s capital markets specialist, firms generally focus more on the spread they’ll pay investors rather than the total financial cost.

“The spread is the main criterion for deciding whether to move forward. It’s different from the bond market, where the emphasis is on the overall cost of financing,” he explains. Mr. Diaz adds that the rate hike could even lead to an increase in available resources for funds.

Vivian Lee from Ibiuna Capital agrees that if interest rates continue to rise as expected, the flow of funds to corporate debt investments is unlikely to be affected. However, if the Selic climbs above 14% per year, individual investors may shift their capital toward more liquid options like CDBs from large banks or government bonds. “At that point, the impact on companies’ financial expenses will be much greater, and credit risk will rise,” she cautions, noting that Ibiuna’s baseline scenario does not currently foresee a Selic rate reaching 14%.

The previous rate hike cycle, which began in 2021, hit Brazilian companies hard. Many had taken advantage of the 2% Selic rate to increase their debt, aiming to finance post-pandemic expansion. However, deteriorating macroeconomic conditions, rising commodity prices, and the devaluation of the real led the Central Bank to sharply raise the Selic rate, peaking at 13.75% in August 2022, the highest since 2016.

This time around, if interest rates climb too much, the benefits of issuing debt at lower rates earlier this year could be wiped out, says Mr. Costa. “The effort to reduce spreads may be negated by a rise in the CDI (interbank short-term rate),” he notes. “At the beginning of the year, the premium on the most liquid debentures dropped from CDI plus 2.3% to CDI plus 1.6%, a 70-basis-point reduction. But if the Selic rises by 150 basis points, the nominal cost of debt will climb much higher.”

Last week’s Focus Bulletin projected the Selic rate to be 11.5% by the end of the year. However, after the Central Bank’s Inflation Report, some market players began betting on a more aggressive rate hike to keep inflation within target, with some institutions forecasting a 12.5% rate at the peak of the tightening cycle. In the latest Focus report, the median expectation edged up to 11.75%.

*By Rita Azevedo — São Paulo

Source: Valor Internatinal

https://valorinternational.globo.com/
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