Agricultural bonds to remain top rural credit source despite new tax

Bonds known as LCA expected to exceed R$700bn by 2026 under Crop Plan

 

 

07/11/2025

Agribusiness Credit Bnds (LCAs) are set to remain the leading funding instrument for Brazil’s rural credit programs in the 2025/26 season, even with a proposed income tax on their returns. According to government projections, the outstanding volume of LCAs is expected to reach R$728 billion by May 2026, up from the current R$651 billion. Of this total, about 60% is earmarked for financing the agricultural sector.

The 2025/26 Crop Plan outlines R$594.4 billion in total rural credit, with LCAs accounting for R$328 billion, or 55% of the funding. In the 2024/25 cycle, they represented 43% of the total.

Currently, income earned from LCAs is exempt from taxation. However, the Ministry of Finance has proposed a 5% tax on earnings, included in Provisional Presidential Decree 1,303/2025, which still requires Congressional approval. If passed, the new rule would take effect in 2026. Despite the tax, Gilson Bittencourt, deputy secretary for agricultural policy and agro-environmental business at the Ministry of Finance, believes LCAs will remain attractive to investors.

“The Finance Ministry’s proposal to impose a 5% tax maintains LCAs’ advantage over other fixed-income instruments while also helping to fund interest rate subsidies in rural credit,” said Mr. Bittencourt.

He noted that high interest rates, particularly the current Selic level near 15% per year, made it unfeasible to keep loan interest rates unchanged in the new Crop Plan. “We wanted to avoid raising rates, but the numbers had to add up,” Mr. Bittencourt said during a media briefing after the plan’s release earlier this month. “In agriculture, the lower the rate, the better. But worse than a slightly higher rate is having no funds at all. That was the government’s main concern.”

Mr. Bittencourt also acknowledged that a drop in the Selic rate could reduce demand for LCAs, which are currently among the most profitable investment options. Nonetheless, investor familiarity with LCAs may help sustain demand even in a lower-rate environment.

Looking ahead, Mr. Bittencourt said the “ideal scenario” for agricultural policy would be a Selic rate of 8.5%—a projection that was common among economists and the government earlier in 2024. In such a scenario, LCAs could be issued at 90% of the benchmark rate plus a spread of up to 3%, resulting in single-digit loan interest rates for market-based credit lines. This would also increase the incentive for banks to use their own funds in rural lending, further easing the fiscal burden of subsidies.

However, Ivan Wedekin, a consultant and former secretary of agricultural policy at the Ministry of Agriculture, warned that taxing LCAs could hurt their competitiveness relative to other instruments, such as bank-issued CDBs, which are already taxed. He also voiced concerns about market confidence.

“Taxing one type of instrument sets a precedent. There’s now a risk that the government could raise the tax from 5% to 10% or even revoke exemptions altogether. That creates uncertainty across the market,” Mr. Wedekin told Valor.

The Agricultural Parliamentary Front (FPA) has also criticized the proposed taxation, echoing concerns that it could undermine trust in rural credit mechanisms.

*By Rafael Walendorff, Globo Rural — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Ex-diplomat urges diplomacy as Trump targets Brazil with tariffs

Former U.S. ambassador Carlos Pascual warns that American president should weigh Brazil’s strategic role in Latin America

 

 

07/11/2025 

Carlos Pascual, former U.S. ambassador to Ukraine and Mexico, said President Donald Trump must consider Brazil’s strategic importance to Latin America when shaping trade relations. While Brazilian President Lula has signaled the possibility of reciprocal tariffs, Mr. Pascual told Valor that the best course of action is to pursue constructive dialogue through diplomatic channels.

“The United States needs to keep in mind that Brazil is the leading power in Latin America, playing a crucial role in the region and in key sectors such as critical minerals,” said Mr. Pascual, who currently serves as vice president for energy and international affairs at S&P Global.

According to Mr. Pascual, reciprocal tariffs from Brazil would be damaging for both countries. Still, he acknowledged that negotiations have become more complicated due to the letter from Mr. Trump, which blends political grievances with trade issues. In the document—which opens by defending former president Jair Bolsonaro—Mr. Trump describes Brazil’s treatment of Bolsonaro as a “global embarrassment.”

“Trump has his own way of imposing tariffs,” Mr. Pascual noted. “He didn’t choose a more traditional mechanism like a quota-tariff system, where the rate increases based on import volume. This was a political judgment. A good diplomatic effort is needed so that both sides can explain their rationale and work toward a mutually beneficial solution.”

The 50% tariff on all Brazilian products, announced by Mr. Trump on Wednesday (9), came as a surprise. Ms. Pascual, however, said the move fits with Mr. Trump’s pattern of using tariffs as leverage. “Trump has used tariffs to advance other political objectives, claiming they support the U.S. economy. He’s even used them in immigration negotiations. But he won’t succeed without diplomatic steps,” he said.

In the letter to Brasília, Mr. Trump listed what he called “a fundamental violation of American free speech” as one of the reasons for his decision. Experts believe this refers to Brazil’s efforts to regulate Big Tech. They point to recent episodes, including the suspension of X (formerly Twitter) in Brazil after noncompliance with court orders, and fines imposed on the platform owned by Elon Musk. Another example was the February suspension of the video-sharing platform Rumble by Brazil’s Supreme Court, ordered by Justice Alexandre de Moraes.

On Thursday afternoon (10), President Lula said Brazil may resort to the Law of Reciprocity if negotiations fail to yield results. He criticized Mr. Trump’s letter, saying it reflected a “total lack of understanding” of the commercial relationship between the two nations.

Although President Lula has expressed a preference for negotiation, Mr. Pascual believes it is too early to tell whether diplomacy will succeed. “There are several areas where talks could move forward. Brazil might try to negotiate a delay in the implementation of the tariffs, which Trump has slated for August 1,” he said.

In the meantime, Mr. Pascual warned that the immediate impact—aside from increased global uncertainty—could be a slowdown in investment and trade between the two countries. “Until there’s more clarity about the direction of the relationship, we may see reduced investment and hesitancy in business decisions between the countries, as companies wait to understand how markets will be directly affected,” he added.

*By Kariny Leal — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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Trump’s tariff threat seen as bigger risk for inflation than growth

Economists warn of secondary effects from currency, trade tensions

07/11/2025 

The 50% tariff announced by U.S. President Donald Trump on Brazilian exports is expected to have a limited direct impact on Brazil’s economy, but economists warn that the damage could escalate depending on how negotiations unfold.

Most analysts agree that the effects will be concentrated in specific sectors and companies. As a relatively closed economy, exports make up a modest share of Brazil’s GDP, and the United States, though Brazil’s second-largest buyer, accounts for just 12% of exports.

However, potential secondary effects warrant attention. Currency volatility, especially driven by heightened risk perception, could push up the exchange rate and reignite inflation. Foreign investment could also be affected if tensions with the U.S. escalate

Preliminary estimates from Bradesco BBI suggest the tariffs could cut $15 billion from exports this year, or 0.6% of GDP. BTG Pactual sees losses of $7 billion in 2025 and $13 billion in 2026, equal to 0.3% and 0.6% of GDP, respectively.

In a report, economists Iana Ferrão and Luiza Paparounis said the effective average tariff on Brazilian goods exported to the U.S. would jump from 1.3% in 2024 to 37.2% in 2025.

“Because the price elasticity of Brazil’s imports relative to the exchange rate is below 1 in the short term, an initial depreciation of the real does little to offset the external shock. This means both the trade surplus and current account are likely to deteriorate by roughly the same amount as the drop in exports,” they wrote.

XP Investimentos forecasts a 0.3 percentage point reduction in GDP growth in 2025 and 0.5 pp in 2026 if the tariffs take effect, with a drop in exports of $6.5 billion and $16.5 billion, respectively. The firm also expects tighter financial conditions. Oxford Economics, in contrast, projects a smaller loss—below 0.05 pp in both GDP and exports in 2026—and sees foreign direct investment (FDI) declining by 0.2 pp.

If Brazil enacts reciprocal measures, the impact would be greater. GDP could shrink by 0.1 pp, and FDI could fall as much as 0.5 pp.

“Trump’s letter may open the door to negotiations and reduce the final tariff. But we’re skeptical: Trump’s threat is unlikely to influence domestic Brazilian politics,” said Felipe Camargo, global chief economist at Oxford Economics.

Inflation impact

The inflation outlook remains more uncertain. Brazil’s price dynamics had been improving, helped by a stronger real, which had also influenced market expectations. But the exchange rate per U.S. dollar rose 1.79% in two days, halting that trend.

If the exchange rate stabilizes, some economists believe the tariff hike might temporarily ease inflation by boosting domestic supply of products usually shipped to the U.S., such as meat, coffee, and orange juice.

“There’s talk that beef prices could rise in the second half of the year, but these developments could cancel that out,” said Warren’s inflation strategist, Andréa Angelo. In her view, the exchange rate would only start affecting inflation if it reverses the gains of the first half and exceeds R$6 per dollar.

Santander shares a similar view. “We might see some downward pressure in the first two months. After that, it depends on the dollar’s path. If it stays around current levels, our inflation forecast doesn’t change much,” Adriano Valladão said. A worsening inflation scenario driven by the exchange rate would require the dollar to rise above R$5.80. On Thursday, the commercial rate closed at R$5.54.

XP does not expect a meaningful inflation impact if Brazil refrains from retaliation. But escalation could hit Brazil’s import basket, which includes fuel, chemicals, pharmaceuticals, and auto and aerospace components.

“For fuels, around 3% of gasoline and 5% of diesel consumed in Brazil come from the U.S. Substitution wouldn’t be easy, but it’s possible. The most critical area, however, is air travel: between 10% and 15% of aviation kerosene used in Brazil is imported from the U.S.,” the firm said. A 50% Brazilian tariff on these goods could add 0.05 pp to inflation through higher airfare.

No retreat expected from Trump

For UBS BB chief economist, Alexandre de Ázara, the 50% tariff on Brazilian products is unlikely to be rolled back. He argued that Mr. Trump’s grievances clash directly with the Brazilian government and judiciary: the legal situation of former president Jair Bolsonaro, Mr. Lula’s pro-Iran rhetoric and support for a BRICS currency alternative to the dollar, and what the American president sees as persecution of U.S. tech companies by Brazil’s Supreme Court.

“The Brazilian government needs to stop escalating first. What we’ve seen so far is that if a country retaliates, Trump always retaliates back,” Mr. Ázara said. He does not believe Mr. Trump will compromise on these issues.

The greater risk, he warned, lies in further escalation. “From an economic standpoint, de-escalation would be wiser. But that doesn’t seem to be the government’s path. If Brazil imposes a 50% tariff across the board, we might stop producing medicine, for instance, because a large share of the pharmaceutical industry’s inputs come from the U.S. And Trump could strike back again.”

Mr. Ázara does not rule out more drastic U.S. measures, such as restrictions on American investment in Brazil. “That could be very damaging and could severely impact the exchange rate,” he said.

*By Marcelo Osakabe and Marcela Villar — São Paulo

Souce: Valor International

https://valorinternational.globo.com/

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Brazil’s tax system deepens inequality, Oxfam says

Organization urges race and gender equity measures in proposed income tax bill to promote fairness

 

 

 

07/10/2025 

Tax policies like the one proposed in Bill 1087/2025 — which expands the income tax exemption threshold and creates a minimum tax rate of up to 10% for those earning more than R$600,000 per year—should take race and gender into account to ensure tax justice, according to Oxfam Brasil.

In a report released Thursday (10), the organization outlines proposals to make Brazil’s tax system more progressive and less unequal. It recommends, among other measures, that the bill include mechanisms for assessing its impact on promoting racial and gender equality across different social groups. “Without considering race and gender markers in tax policies, there’s no way to evaluate whether we’re truly making progress,” said Carolina Gonçalves, coordinator of social and economic justice at Oxfam Brasil.

The report highlights the concentration of income in Brazil and notes that, according to the government, the expanded exemption would benefit 10 million people, financed by just 141,000 individuals who make more than R$50,000 per month and would be subject to a minimum 10% tax rate. “In other words, 0.13% of all taxpayers in the country can bear the cost of exempting 10 million people,” the document said.

For Ms. Gonçalves, in a country with a historically regressive tax structure—in which the tax burden decreases as income rises—tax injustice cannot be separated from racial inequality. “This structure perpetuates and deepens inequality,” she said.

An analysis of 2024 household survey data (Pnad) by Oxfam Brasil found that among individuals earning R$3,000 to R$7,000 per month—the group that stands to benefit from the proposal—59% are men and 41% women. Racially, 55% are white and 44% are Black or mixed race. Among the wealthiest 0.1% of Brazilians, who earn an average annual income of R$6 million, only 19% are women and 20% are Black or mixed race.

“The top of Brazil’s economic pyramid is overwhelmingly made up of white men. That’s no accident,” Ms. Gonçalves said.

Luiza Nassif Pires, a professor at the University of Campinas (Unicamp), warned that macroeconomic policies that fail to address inequality and its dimensions—such as race and gender—risk deepening it. “So any reform to promote tax justice must be sensitive to race and gender,” she said. Her research, she noted, shows that the current income tax system disproportionately benefits white individuals. Ms. Pires also co-directs the Center for Research on Inequality and Macroeconomics at the University of São Paulo’s School of Economics and Business (Made-FEA/USP).

Economist Nathalie Beghin, a board member at the Institute for Socioeconomic Studies (INESC), argued that so-called “neutral” approaches are not enough to fix the structural inequality embedded in Brazil’s tax system.

“That’s why affirmative measures are necessary—such as the cashback mechanism approved in the recent tax reform, which allows part of the tax burden to be refunded to lower-income households, or income tax exemptions for the poor,” she said, referring to the proposal in Bill 1087/2025, which is currently under review in the Lower House.

Oxfam Brasil supports the bill’s approval but recommends adding both an impact evaluation framework and a section in tax forms for self-declared race. These data, the report says, could support the creation of more equitable public policies.

*By Michael Esquer — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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Brazil’s inflation exceeds target ceiling for first time under new rules

IPCA rose 0.24% in June and 5.35% over 12 months, breaching continuous target system of 4.5%

 

 

 

07/10/2025 

Brazil’s official inflation, as measured by the Extended Consumer Price Index (IPCA), rose 0.24% in June, slightly down from 0.26% in May, according to data released by the national statistics agency IBGE. While modest, it was the highest rate for the month of June since 2022, when inflation reached 0.67%.

The June figure came in above the median forecast of 0.19% from 33 financial institutions and consulting firms surveyed by Valor Data, Valor’s financial data provider. Forecasts ranged from 0.11% to 0.26%.

In the 12 months through June, inflation reached 5.35%, exceeding the upper limit of the Central Bank’s inflation target range for the first time since a new framework came into effect earlier this year. The current system sets a continuous target of 3%, with a tolerance band of 1.5% to 4.5%. If the 12-month IPCA remains outside this range for six consecutive months, the target is considered to have been breached.

Since January 2025, 12-month inflation has remained above the 4.5% ceiling. The June result marks the sixth consecutive month above the range, triggering a formal breach under the new rules set by the National Monetary Council (CMN).

Under the new framework, the Central Bank must now publish a semiannual open letter to the finance minister explaining the reasons for missing the target, the steps being taken to bring inflation back within the range, and the expected timeframe. The institution must also include a written explanation in its Monetary Policy Report, which replaces the previous Inflation Report published every quarter.

The inflation target system was revised to enhance predictability in monetary policy. Previously, the Central Bank aimed to meet an annual target based on end-of-year inflation. The shift to a continuous target requires the institution to manage inflation expectations more consistently over time.

For the 12-month figure, the median market expectation was 5.3%, according to Valor Data, with estimates ranging from 5.22% to 5.37%.

IBGE calculates the IPCA based on the consumption basket of households earning between one and 40 minimum wages, covering 10 metropolitan areas along with the cities of Goiânia, Campo Grande, Rio Branco, São Luís, Aracaju, and Brasília.

Price behavior by category

Of the nine spending categories used to calculate the index, five showed slower price increases in June compared to May. Food and beverages saw deflation of 0.18% in June after rising 0.17% the previous month. Slower inflation was also observed in housing (from 1.19% to 0.99%), health and personal care (from 0.54% to 0.07%), personal expenses (from 0.35% to 0.23%), and education (from 0.05% to zero).

On the other hand, price increases accelerated in household goods (from -0.27% to 0.08%), clothing (from 0.41% to 0.75%), transportation (from -0.37% to 0.27%), and communication (from 0.07% to 0.11%).

Diffusion and core inflation

Inflation became less widespread in June. The diffusion index, which tracks the share of goods and services with price increases, fell to 53.6% from 59.7% in May, according to Valor Data. Excluding food, which is among the most volatile categories, the index remained stable at 59.8%.

The average of the five core inflation measures tracked by the Central Bank slowed slightly to 0.29% in June from 0.30% in May, according to MCM Consultores. Over the 12-month period, the average of the core indexes rose to 5.23% from 5.17%.

By Lucianne Carneiro

Source: Valor International

https://valorinternational.globo.com/

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Supreme Court suspends IOF decrees, calls conciliation hearing

Justice Moraes questions legitimacy of tax hike while urging better dialogue between branches of government

 

 

07/04/2025 

Supreme Federal Court (STF) Justice Alexandre de Moraes on Friday (4) suspended both the executive and legislative decrees related to Brazil’s Financial Transactions Tax (IOF) and summoned representatives from the Presidency, Senate, Chamber of Deputies, and Office of the Prosecutor General (PGR) for a conciliation hearing on July 15.

The decision stems from cases filed by the Liberal Party (PL) and Socialism and Freedom Party (PSOL), as well as the Attorney General’s Office (AGU), regarding the legality of the IOF hike. While Mr. Moraes acknowledged the executive branch’s authority to adjust tax rates, he expressed concern over the “nature” of the recent increase.

“There is a serious and well-founded doubt about whether the presidential decree was used to adjust the IOF for purely fiscal purposes. In a preliminary assessment, this is enough to consider a potential abuse of power. If the president’s autonomous decrees are driven by a deviation of purpose, they may violate the principle of proportionality,” Mr. Moraes wrote.

He granted a preliminary injunction suspending Executive Decrees 12.466/2025, 12.467/2025, and 12.499/2025, as well as Legislative Decree 176/2025. The decision will now be sent to the full court for review, though no date has been set.

Allies with ministries also filed suit

In addition to the actions brought by the PL, PSOL, and AGU, a fourth case was filed Thursday night (3) by parties that hold ministerial positions in the Lula administration. These parties are asking the STF to declare constitutional the legislative decree that overturned the IOF increase.

Among the parties behind this request are Brazil Union, Progressives, and Republicans, which together control five ministries, including Tourism, Communications, Social Development, Sports, and Ports and Airports. Also joining the suite are Brazilian Social Democracy Party (PSDB), Solidarity, Democratic Renewal Party (PRD), Podemos, and Avante. They argue that “Congress acted properly in blocking measures that raised taxes without following the legislative process.”

Court battle deepens political crisis

The AGU’s move to file a case with the STF on Tuesday (1) to restore the IOF hike further strained relations between the Lula government and Congress. Lawmakers, particularly congressional leaders, were already upset over aggressive messaging on social media by the Workers’ Party (PT), which included AI-generated videos portraying Congress as “the enemy of the people.”

These attacks, part of a broader “rich vs. poor” narrative pushed by the government, specifically targeted Chamber Speaker Hugo Motta (Republicans of Paraíba). The polarization strategy had already drawn criticism from lawmakers and is expected to further deteriorate relations with the Legislature. In response, the Brazil Union-Progressives federation released its own video rebutting the campaign over the weekend.

Yesterday, before his party filed its own case against the executive, Congressman Arthur Lira (Progressive Party, PP, Alagoas), speaking at an event in Lisbon, called for de-escalation among all branches of government. “Everyone needs to take a step back—the Legislative, Judiciary, and Executive. They need to sit at the table and resolve this without letting tensions get this high,” said Mr. Lira, who previously served as Speaker of the Chamber.

According to him, both the Executive and Legislative were within their rights in the IOF dispute. “This will only be resolved through dialogue—and that’s what we’ve been working around the clock to make happen,” he said.

*By Tiago Angelo, Valor — Brasília

Source: Valor International

https://valorinternational.globo.com/

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Mercosur summit showcases Brazil-Argentina divisions

Lula promotes integration; Milei warns against economic rigidity

 

 

07/04/2025 

On the day Brazil assumed the rotating presidency of Mercosur, President Lula said the South American bloc serves as “a refuge where we feel safe” and shields its members from “foreign trade wars.” Speaking in Buenos Aires during the handover ceremony from Argentina, President Lula’s remarks stood in stark contrast to those of Argentine President Javier Milei, who warned against the bloc becoming an “iron curtain” for its members.

It was Mr. Lula’s first visit to Argentina since Mr. Milei took office. The two leaders did not hold a bilateral meeting, although President Lula visited former Argentine President Cristina Kirchner, signaling his political alignment.

“When the world becomes unstable and threatening, it’s natural to seek refuge where we feel secure. For Brazil, Mercosur is that place,” President Lula said during the 66th Mercosur Summit. “Over more than three decades, we’ve built a house with solid foundations, capable of withstanding storms. We’ve established a network of agreements that now includes associate states. All of South America has become a free trade area, grounded in clear and balanced rules.”

According to President Lula, the bloc’s Common External Tariff serves as protection against external trade conflicts. “Being part of Mercosur protects us,” he said, adding that member states must work together to preserve their autonomy in an increasingly polarized global context.

For its six-month presidency, Brazil has outlined five main priorities: strengthening trade within the bloc and with external partners, addressing climate change and promoting energy transition, advancing technological development, combating organized crime, and promoting citizens’ rights. President Lula said Brazil’s leadership will be a chance to reflect on “the place we aim to occupy on the new global chessboard.”

Standing beside Mr. Milei, President Lula renewed his support for deeper economic integration and reducing the bloc’s dependence on the U.S. dollar. He advocated for a payment system using local currencies to facilitate digital transactions, lower costs, and reduce exchange rate risks.

Strengthening trade within the bloc and with external partners will be a top priority, he said, citing the need to integrate the automotive and sugar sectors into the customs union. “Delaying this task means sacrificing the bloc’s strategic potential in the production of electric vehicles and biofuels,” President Lula said.

He also announced plans to advance trade negotiations with Canada and the United Arab Emirates. Within the region, he emphasized the need to engage with Panama and the Dominican Republic, as well as update existing agreements with Colombia and Ecuador. He also called for Mercosur to turn its attention to Asia, which he described as “the dynamic center of the global economy.”

In contrast, Mr. Milei emphasized that Argentina’s top interest in the bloc is opening new markets for its exports. In his closing speech as outgoing chair of Mercosur, the Argentine president called for greater economic freedom within the bloc and more flexible internal rules. He insisted that Mercosur cannot remain “an iron curtain” for its members.

“We urgently need more freedom. We’ve left behind decades of stagnation. Mercosur’s partners must decide whether they want to support the path we’ve embarked on. Either we move forward together or alone,” Mr. Milei said. In his view, the bloc should no longer be seen as “a shield that protects us from the world, but a spear that allows us to enter global markets.”

While neither leader directly criticized the other, the distance between them was evident. After the summit, President Lula visited Ms. Kirchner and posted a photo of them holding hands, wishing her strength in her “fight for justice.”

President Lula said his bond with Ms. Kirchner extends beyond formal relations. “It’s a friendship rooted in mutual affection, shared political ideals, and a common commitment to social justice and fighting inequality,” he wrote. Ms. Kirchner is currently under house arrest, serving a six-year sentence for corruption.

*By Sofia Aguiar — Brasília
Source: Valor International
https://valorinternational.globo.com/
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Development lenders test new funding strategy for AI, data centers

BNDES and Finep sign agreement aiming to turn Rio into high-capacity data hub; exploring R$1bn AI investment fund

 

 

07/02/2025

Brazil’s leading development institutions are ramping up efforts to attract artificial intelligence (AI) investments and boost the country’s data center infrastructure. On Tuesday (1), the Brazilian Development Bank (BNDES) and the Studies and Projects Financing Agency (Finep) signed a memorandum of understanding to develop Rio de Janeiro as a strategic data center hub. The agreement also includes the federal government, the city of Rio, and power utility Eletrobras.

The memorandum—focused on developing, financing, and installing high-capacity data centers in the city—is the first of its kind and could serve as a model for other states and municipalities.

Speaking at the Governance and Public Strategies in Artificial Intelligence forum, held in parallel with the BRICS summit at BNDES headquarters in Rio, the development lender’s Planning and Project Structuring Director, Nelson Barbosa, said the bank is evaluating the creation of a dedicated investment fund for data centers and AI.

Mr. Barbosa said BNDES plans to commit between R$500 million and R$1 billion to the fund as part of its renewed strategy for equity investments via BNDESPar, the bank’s equity investment arm. Last week, BNDES President Aloizio Mercadante announced that the bank will allocate R$10 billion to stock investments—half through direct stakes and half via private equity-style investment funds (FIPs).

“Of the R$5 billion allocated to funds, we’re evaluating a fund focused on data centers and AI, with a potential BNDES commitment of between R$500 million and R$1 billion,” Mr. Barbosa said.

Including potential private co-investment, the total size of the fund could reach between R$2.5 billion and R$5 billion. It would support various segments of the IT and AI ecosystem—from different data center models to algorithm development, applications, AI solutions, and hardware such as gaming technologies and creative industry tools.

Mr. Barbosa said BNDES has already deployed R$1.7 billion in the sector since 2023 through direct financing and investment fund participation. That includes R$1 billion in nine transactions involving hardware, data centers, and IT products; R$63 million in equity investments in two tech firms via BNDESPar; and R$700 million across seven investment funds focused on AI-enabled business models. The bank expects these funds to mobilize another R$2.3 billion in private capital, Mr. Barbosa said.

Finep President Luiz Antonio Elias said Brazil has a significant opportunity to position itself competitively in the global technology market by creating a “positive financing environment.” He highlighted the strategic nature of the new protocol.

“The memorandum offers a differentiated financing model involving Finep, BNDES, and Eletrobras, recognizing Rio’s unique opportunity. The city becomes more attractive for investment thanks to its existing connectivity infrastructure,” Mr. Elias told Valor, referring to the international submarine cables established during the 2016 Olympics.

The initiative aligns with Brazil’s National Artificial Intelligence Strategy, launched by the federal government last year. “[This agreement] represents a strategic initiative with significant economic, scientific, and technological impact,” Mr. Elias added.

*By Camila Zarur and Paula Martini — Rio de Janeiro

Source: Valor International

https://valorinternational.globo.com/

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July stock picks dominated by risk-averse plays

Analysts favor large caps and conservative bets with banks, telecom, and utilities among top picks

 

 

 

07/02/2025 

Embraer technician working on a turbine: aircraft maker returned to portfolio after absence in June — Foto: Divulgação/Divulgação
Embraer technician working on a turbine: aircraft maker returned to portfolio after absence in June — Photo: Divulgação/Divulgação

The Ibovespa ended the first half of 2025 in positive territory, buoyed by strong foreign investor inflows. With international funds focusing on large-cap blue chip stocks, analysts contributing to the Carteira Valor selection of stock picks followed suit. In the first monthly selection of the second half, the list remained conservative—dominated by major financial institutions, exporters, and providers of essential services.

Itaú retained its position at the top of the list, this time sharing the lead with Telefônica Brasil (Vivo), a new entry. Both stocks received four recommendations. Analysts at Ágora highlighted Telefônica as Brazil’s largest mobile telecom provider, with 98 million subscribers and a 39% market share. After a disappointing Q4 2024, its first-quarter 2025 results offered “a welcome relief,” with revenue, EBITDA, and net income showing strong trends.

BTG Pactual and Banco do Brasil also remained on the list with three mentions each, while Bradesco reappeared with two. Bank stocks are often viewed as reliable even in volatile markets, making them a lower-risk option in equity portfolios.

Utilities—considered safer investments due to stable, recurring revenue streams—were also prominently featured. In addition to Telefônica, analysts recommended Copel (three mentions), a new addition this month, and Sabesp (two mentions), which returned to the list. Ágora’s team pointed to Copel’s “solid fundamentals” and noted that the company’s new capital structure policy, unveiled in May along with Q1 results, should support attractive dividend payments and help lift its stock price.

Rounding out the list were exporters such as Prio, which remained a favorite, and Embraer, which returned after not being included in June. Both were selected by three brokerages. These companies earn a significant share of their revenue abroad, offering investors a natural hedge against domestic market risks.

Carteira Valor compiles the ten most-recommended stocks among participating brokerages. Each firm selects five stocks, and the ranking is based on frequency of recommendations from a pool of 16 institutions.

In the event of a tie, stocks with higher average trading volume over the past 90 business days are ranked higher. Monthly returns are calculated based on the simple average performance of the selected stocks, with no weighting.

Brokerages contributing to Carteira Valor include: Ágora, Andbank, Ativa, Banco Daycoval, BB Investimentos, Benndorf Research, CM Capital, Genial, Monte Bravo, Nova Futura, Planner, Safra, Santander, Terra Investimentos, and XP Investimentos. Pagbank did not participate in June due to internal restructuring.

In June, the Carteira Valor portfolio rose 0.27%, compared to a 1.33% gain in the Ibovespa. Year-to-date, the portfolio is up 6.17%, versus a 15.44% gain for the Ibovespa. Over 12 months, the portfolio gained 6.28%, while the benchmark index rose 12.06%.

Check out the full portfolio here (in Portuguese).

*By Nathalia Larghi — São Paulo

https://valorinternational.globo.com

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Companies reject proposed changes to Novo Mercado rules

Majority vote blocks revisions to governance standards for Brazil’s top-tier listing segment

07/02/2025

Brazilian listed companies have rejected proposed changes to the rules of B3’s Novo Mercado, the stock exchange’s premium segment for firms adhering to the country’s strictest corporate governance standards. The vote on 25 proposed amendments concluded on Monday (June 30), with results published Tuesday on B3’s website.

According to the exchange, 152 companies participated in the vote. Of those, 74 opposed all of the proposed changes. Under Novo Mercado rules, this is enough to block the revisions, as the segment requires fewer than one-third of companies to reject a proposal for it to pass.

Only eight companies supported all the amendments, while 70 approved some changes but not others.

“It’s a sad day for the market and for corporate governance,” said Fábio Coelho, president of Amec, the association representing minority shareholders, including asset managers. “We knew the vote would be close, but investors didn’t expect such a strong message of rejection to the proposed improvements.”

Mr. Coelho noted that many of B3’s proposals had no direct financial impact and were already standard in other markets. “We assumed most items would be broadly accepted, but that wasn’t the case.”

Luiz Martha, director of knowledge and impact at the Brazilian Institute of Corporate Governance (IBGC), said the decision was a missed opportunity. “We’re losing a chance to modernize not just Novo Mercado—already a pioneer in governance practices—but the broader capital market,” he said.

“Created 25 years ago as a seal of trust and quality, the segment now risks losing its appeal by failing to evolve,” Mr. Martha added.

This marked the fifth review of the Novo Mercado rules since the segment’s inception in 2000. The process began in May 2024 and included two public consultation rounds with listed companies, market participants, and institutions.

After gathering feedback, B3 launched a restricted hearing process in March, with the vote initially scheduled for late April. The deadline was extended to June 30 at the request of participating companies.

B3 stated that throughout the process, it held more than 60 meetings with about 120 companies and received 76 written submissions from companies, investors, associations, and market experts.

During the restricted consultation phase, B3 also committed to launching a broader discussion with market stakeholders and regulators on procedural matters related to future changes to the Novo Mercado regulations. According to feedback seen by Valor, many companies found that procedural review more relevant than the 25 specific proposed revisions.

*By Nelson Rocco, Valor — São Paulo

Source: Valor International

https://valorinternational.globo.com/

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