Lawyer hired to defend their rights also intends to hold accountable auditors of PwC


Legal strategy targets personal assets of executives and the controlling group — Foto: Dado Galdieri/Bloomberg

Legal strategy targets personal assets of executives and the controlling group — Foto: Dado Galdieri/Bloomberg

Minority shareholders of retail giant Americanas will request the Prosecution Service (MPF) in Brasília to investigate criminal responsibilities and freeze assets of those responsible for a potential fraud that resulted in accounting inconsistencies totaling R$20 billion unveiled by the company last week.

“From the standpoint of criminal law, I’m not going after the business; I’m going after the individuals,” says criminal lawyer Daniel Gerber, hired by a group of the retailer’s minority shareholders. “It makes no difference to me whether Americanas goes into receivership,” he adds.

This is because Mr. Gerber’s legal strategy targets the personal assets of executives of Americanas and of the controlling group, who “by action or omission” are responsible for the multi-billion loss. The lawyer also intends to hold the executive directors of PwC, the company that audited Americanas’s earning reports, accountable.

Last Friday, the MPF in São Paulo started to investigate evidence of insider trading in the sale of Americanas shares. Mr. Gerber explains that a second possibility would be to request to join this case as a victim. An asset manager, who spoke on the condition of anonymity, said he was surprised that the former CEO of Americanas, Sérgio Rial, participated last week in a closed conversation at BTG Pactual with investors and analysts about Americanas’s situation.

“It’s the basic premise of the stock market: everyone should have access to the same information. It’s a public market,” says the financial market source, adding that the information disclosed in the conversation between Mr. Rial and the investors was only available to a limited group of interested parties.

In this source’s view, Americanas failed both in the way the inconsistencies were disclosed to the market and in the explanations afterwards. “They [Rial and the executives who had just joined the company] had to take the problem, study it, and explain to the market exactly what happened. To this day, we don’t know exactly what occurred,” criticizes the manager.

A second source, who closely follows the unfolding of the crisis in court, says the company’s main goal at the moment is to reach an agreement with the creditor banks. The tension between the retailer and its creditors grew after the decision in court on Friday granting Americanas protection from creditors for 30 days. In the evaluation of this second source, issues such as the possibility of foreign shareholders to file a class action are secondary at the moment.

*By Rodrigo Carro — Rio de Janeiro

Source: Valor International
Brazilian bank’s local subsidiary is the fastest-growing credit card issuer in the country


David Vélez — Foto: Ana Paula Paiva/Valor

David Vélez — Foto: Ana Paula Paiva/Valor

Nubank will strengthen its presence in Colombia with a loan of up to $150 million from the International Finance Corporation (IFC), a member of the World Bank Group. The local currency loan over a period of three years will be used to boost the growth of the local operation and expand access to financial services in the country.

With more than 400,000 cards issued in the last 10 months, Nu Colombia – a subsidiary of Nubank – is the fastest-growing credit card issuer in the country. “We are proud that an institution like IFC has trusted us to continue generating a positive impact in Latin America,” said David Vélez, CEO and founder of Nubank.

“Our loan to Nubank means more Colombians will have access to more and better financial services,” said IFC’s managing director Makhtar Diop. “Greater financial inclusion is a must for economic growth, and digital banking will play a key role in meeting the needs of underbanked and unbanked retail customers.”

Nubank has more than 70 million customers in Brazil, Mexico and Colombia.

*By Álvaro Campos — São Paulo

Source: Valor International
People of the forest learn to add value to cupuaçu seed with Instituto Amazônia 4.0


Ismael Nobre — Foto: Carol Carquejeiro/Valor

Ismael Nobre — Foto: Carol Carquejeiro/Valor

Hundreds or even thousands of mobile and dismountable chocolate factories distributed throughout the Amazon Forest, operated by local people, including indigenous people. The idea, which will start to be implemented in March four communities, came from the initiative of a small group of scientists who created Instituto Amazônia 4.0 – and have in common the preservation of the forest. They saw in these mobile bio-factories, or Amazon Creative Laboratories (LCAs), as they are called, a way for the people of the forest to add value to cocoa and cupuaçu seeds, which they currently sell as raw material or with little processing.

The investment so far amounts to R$5.6 million, without considering the donations of knowledge, equipment, and working hours provided by companies, volunteers, and chocolate experts.

IDB Lab, which is the innovation laboratory of the Inter-American Development Bank, is investing R$3 million this year in the current phase of the project – the proof of concept, with technology provided by NEC do Brasil, to prove that the project is feasible and financially viable. The funds are destined to take the innovation to the communities and hire Conexsus, which will prepare them for the business – credit profile, knowledge of what they are selling, rounds of negotiations with municipalities and more.

Another R$2.6 million have been invested so far in the cocoa-cupuaçu value chain, considering consulting, equipment purchase, transformations made in equipment, and technological adaptation. The funds were financially executed with the purchase of the geodesic domes, a type of triangular structure tent, rigid and resistant that constitutes the structure of the bio-factories. They were designed, with no money involved, by Atelier Marko Brajovic, using light, resistant, and demountable materials.

The prototype of the factory was made in São José dos Campos (São Paulo). A unit is being set up in Manaus (Amazonas), where the plants will be produced and then transported to the forest.

These factories allow cocoa and cupuaçu seeds to be processed into high-quality chocolate. Thus, instead of the price of R$10 per kilo of raw material sold, the communities will be able to earn R$200 per kilo of “fine” chocolate produced, said Ismael Nobre, a professor and researcher at the University of Campinas (Unicamp/SP).

A biologist, Ismael Nobre takes part in the project with his brother, climatologist Carlos Nobre, who was part of the international team of scientists awarded the Nobel Peace Prize in 2007; and professor Tereza Cristina Brito Carvalho, from the Polytechnic School of the University of São Paulo and coordinator of USP’s Sustainability Laboratory.

In 2017, less than half a dozen scientists created the Instituto Amazônia 4.0. Today, the Nobre brothers and Professor Carvalho remain. Professor Ismael, executive director, says that the institute represents the fourth industrial revolution and seeks to foster a new bioeconomy in the Amazon rainforest, through the hands of traditional and indigenous peoples.

Without polluting or harming the environment, the bio-factories will produce chocolate, taking advantage of the natural cacao and cupuaçu plantations, abundant in the forest. The business will be in the hands of the first chosen communities — riverside dwellers, quilombolas (descendants of escaped slaves), extractivists, and land reform settlers. Later, they will be expanded to other populations.

The riverside and quilombola communities already ferment cocoa and sell it to the fine chocolate industry. With this benefit, the price of R$10 for the raw material rises to R$30. Everyone is already involved in improving fermentation and learning methods to produce chocolate. These groups use rudimentary techniques and low-tech elements, but they are not satisfied with selling the product so cheaply, while ready-made chocolate costs about 20 times more, said Professor Ismael. The nascent chocolate is called “tree-to-bar.”

Abundant cocoa in the management area, existing work with the fruits, non-conformity with the sale price, and effort to add value were the main criteria adopted by the institute for choosing the communities that will receive training and will have priority in the search for support for the viability of business.

After the philanthropy capital used to start the process, investment funds will be needed for the massive implantation of the factories in a commercial system. The model will be conceived in such a way that local production can pay for the installation of the available factories.

The institute is thinking of a business model in which communities can “sign a factory,” which will be available as a service, and not as a possession, so communities do not need to have several million reais or the ability to contract donations or loans, said Professor Ismael. It’s something like software as a service, which the big tech companies have embraced.

More than a dream, the project is in the proof-of-concept phase. After the kick-off, scheduled for March, the four communities will be trained for eight months. For this, a complete itinerant factory, including a place for classes, will be taken from one community to another, starting with the extractive reserve and then moving on to the area of land reform settlers, quilombolas, and riverside dwellers, in that sequence. In 2024, another phase is expected to begin, expanding to the entire Amazon. But the financial equation is still being put together.

Technology engineers, food engineers, software engineers, personnel specialized in mechatronics (a combination of mechanics and electronics), architects and other specialists face the challenge presented by the scientists — to design a chocolate factory that could be built elsewhere and then assembled in the forest, at the same time modern and simple to operate.

Companies from different sectors joined the project. Companies from different sectors joined the project, such as NEC, which became a partner of the institute and took care of all the communication. Cristiano Blanez dos Santos, director of innovation at the company, says that it took two years of discussions and studies to decide which technology to offer. For communication, they chose radio.

Four internet service providers were identified, each about 30 kilometers from the communities. An antenna at the provider and another at the factory will enable communication, which will be made up of other equipment, such as routers and switches to distribute the signal throughout the facilities. Surrounding populations are potential customers for these companies.

The factories will have cabling, computer, access control to the machines by facial recognition, voice commands, electronic sensors, oven, all automated and coordinated by the institute, said Blanez dos Santos.

“The person doesn’t even need to be able to read the machine instructions,” said the biologist. “The machine will support several languages, including indigenous languages. Even the indigenous people who doesn’t speak Portuguese will be able to operate the machines like any of us and make production happen.”

The dome environments are triangular, divided into the factory; roasting, oven and mill; and a place to mold the chocolate. The biggest tent is the factory tent, 5 meters high and 11 meters in diameter. Each unit is 100 square meters. The classroom dome has capacity for 40 students and is equipped with teaching materials such as tablets and electronic whiteboards, as well as software that connects the classrooms with the factory. While learning, the student sees what is happening in the factory. Through the internet of things, the data generated goes through the network.

“We created a ‘plug and play’ factory,” said Professor Ismael, playing with a concept that indicates ease of use. “In a week, you have a factory ready. It’s all modular and doesn’t need a foundation or earthworks, the systems have a floor that makes the leveling.”

The institute associates the culture, customs, and recipes of the people of the region with the expertise of renowned chefs from the chocolate industry, chocolatiers, engineers, and technology specialists. It was from this fusion that the portable bio-factories of the Amazon Creative Laboratories (LCAs) emerged.

One of the collaborations came from Cacauway, a chocolate factory located on the Tranzamazônica highway, in the municipality of Medicilândia, in Pará. Professor Ismael says that the business arose from a cooperative of producers who planted cocoa and sold it to large traders. Afterwards, they decided to set up a factory, today with their brand already consolidated. “But they had huge challenges, it took them years to reach a financial equation,” said the professor. “It was challenging to successfully replicate the business in many places, and to this day they still struggle.”

However, communities enter the business with an advantage. They will not need to repeat all the steps taken by Cacauway. The process and technology have already been developed and facilitated. With this, the initiative to add value will be available to many populations, with the potential to generate multiple similar businesses, says Professor Ismael.

Other experts taught their recipes. The aggregation of value in this type of production is considered somewhat complex, with many variables to be mastered.

The institute’s research is currently focused on cupuaçu, cocoa, Brazil nuts, açaí, oils and genomics. The most advanced project is the cupuaçu-cocoa laboratories. In 2018, researchers chose cocoa as the first value chain to work on. The cupuaçu seed, with which it is possible to produce chocolate that competes with cocoa chocolate, is not used today by the communities – it is thrown away.

At the beginning of the project, in 2019, after learning about the extraction processes, the researchers made a layout of what the chocolate factory would be like. With the Covid-19 pandemic, the process was delayed, but it took off and maintained an accelerated pace in 2020 and 2021.

The solar energy system powers the entire factory and eliminates the need for a thermal power plant. A water production plant guarantees the purity of the liquid, classified by the health regulator Anvisa for use in the food chain. The water treatment station, with non-polluting resources, is computer controlled and has several filters to eliminate particles, odors, bacteria and chlorinate. The professor claims that this treatment was provided by São José dos Campos-based company Resix, which patented the automatic chlorination system.

The energy equation was developed by the institute, but the solar power that will be used in the factory will be able to serve the whole community later.

A chocolate manufacturer from São José dos Campos (Argonay) also collaborated, says Professor Ismael. “The owner of the factory is an aerospace engineer who is now dedicated to chocolate. He has the mind of an inventor, he is an engineer, capable of taking chocolate and translating it into technologies.”

With the evolution of the process, the scientists hope that technologies, collaboration and promotion can and will enable vertical value chains where local communities are the owners of the processes, generate more funds, more wealth from the input of the forest, imagines Ismael Noble.

*By Ivone Santana — São Paulo

Source: Valor International
Aim is to open more room for allies and non-elected politicians in boards


Luiz Inácio Lula da Silva — Foto: Eraldo Peres/AP

Luiz Inácio Lula da Silva — Foto: Eraldo Peres/AP

Less than a month after the beginning of its term, President Luiz Inácio Lula da Silva’s team is preparing a clean bill that aims to change the State-owned Companies Law. The goal is to open more space for allies and non-elected politicians in board positions of state-run companies run by the federal government or states. The effort is seen with suspicion by market agents and specialists, who highlighted risks of setbacks in the governance of these companies.

Valor has learned that the draft is being prepared by the Chief of Staff Office’s Secretariat of Legal Affairs (SAJ), with the support of the Federal Attorney General’s Office (AGU). After that, the government plans to ask an allied senator to accept the suggestions and introduce a draft to replace the proposal already passed by the Chamber of Deputies at the end of last year, which was put on hold in the Senate after the issue generated negative reactions in the financial market. If passed, it would have to go back to the Chamber before being signed into law by the president.

At the time it was passed by the lower house, the presidential transition’s team did not want to leave its fingerprints on the bill. The idea was criticized by economic agents due to the possibility of appointing former lawmakers and union members to management positions in companies such as Petrobras, Caixa Econômica Federal, and the Brazilian Development Bank (BNDES), which is forbidden by law today. Now, however, the draft may move forward with the support of the government, which will seek to consolidate its governing coalition in Congress.

It has not yet been defined whether the flexibilization will be total or partial in terms of access to positions that are currently restricted to civil servants. Mr. Lula’s aides say that, for now, the idea is that the government’s clean bill opens space for allies of the Lula administration only in boards. This means, in practice, a space of 317 positions on the boards of directors of these companies for the president to appoint, with greater freedom, in his new term.

But, in case the clean bill proposes a flexibilization also for the management positions, this number increases by 272 positions. In all, there would be 589 prominent posts available. These numbers exclude, however, Eletrobras and Codesa, which were privatized recently. The list of positions is included in the latest annual report of the Special Secretariat for Privatization of the former Ministry of Economy.

After the draft is ready, the government’s allies are expected to take the proposal to Senate President Rodrigo Pacheco. The proposal is at the upper house at the moment. Last year, however, the presidential transition team was not able to convince senators and the matter was put on the back burner.

One reason for this objection from some lawmakers is the fact that the proposal now being considered reduces to just 30 days from 36 months the quarantine period for people who held party decision-making structures or participated in electoral campaigns to serve as CEOs or executives in state-owned companies or advisors to regulatory agencies.

In this battle, on the other hand, the federal government has the support of the so-called “Centrão” — a cluster of center-to-right parties — and Chamber Speaker Arthur Lira, who backed the advancement of the matter when it was still under analysis in the lower house. Mr. Lira and the lawmakers see in the measure a way to appoint allies in strategic positions that have already served parties known for cronyism.

“The Law of State-Owned Companies, in its origin, was thought to guarantee a more specialized profile for the leaders of the state-run companies and regulatory agencies,” said Pedro Henrique Costódio Rodrigues, a lawyer specializing in administrative law. “The changes proposed make the criteria and requirements more flexible, and this leaves room precisely for political appointments and the occupation of these management positions by lawmakers,” added the lawyer, for whom a more flexible approach would increase the possibility of political influence in the state-owned companies.

*By Renan Truffi, Fabio Murakawa, Fernando Exman — Brasília

Source: Valor International
The project, however, still depends on environmental permits


Maraey — a tourism-residential project run by foreign investors in Brazil — has reached an agreement with Marriott International to build three hotels on the property, located in Maricá, Rio de Janeiro state. In total, R$ 2.3 billion in investments are planned for the three structures. With the agreement, the U.S. hotel chain promises to launch the Ritz-Carlton Reserve luxury brand in South America.

Maraey is devised by IDB Brasil, a company that owns 840 hectares of land and will own the hotels. The company is formed by a group of Spanish, Brazilian, American, and Chinese businessmen, led by the Cetya and Abacus groups. Their activities are mainly in construction through the development of real estate and hotel projects. The company in charge of the construction is still to be defined.

The plan is ambitious, since the Brazilian hotel market has difficulty attracting large luxury brands due to issues such as exchange rates and unprofitable tariffs. In Rio, one of the main luxury brands today is Fasano, which is national.

It was only last year that Marriott brought the first JW Marriott unit to Brazil — opened in São Paulo, in the building formerly occupied by the Four Seasons. The company will also give its name to one of Maraey’s hotels. The Rio de Janeiro version of the JW Marriott will be one of the first of the hotel group to adopt the “all-inclusive” model (tourists pay a daily rate that includes all expenses inside the hotel).

A theme hotel called Rio Autograph Collection is also planned, the first with the Rock in Rio music festival brand.

The hotels will have more than 1,100 rooms altogether, all operated by the U.S. giant. Maraey’s final project foresees one more hotel, which is still under study.

“In association with the hotels, we foresee the offer of 244 exclusive branded residences (villas, duplexes, and apartments),” Emilio Izquierdo, Maraey CEO, told Valor. In total, 80 will use the Ritz-Carlton Reserve brand and the rest will be under the JW Marriott brand.

“We are creating a unique tourist destination in this strategic market for us, which is Brazil,” says Laurent De Kousemaeker, head of development for Marriott International. The forecast is to start construction in the second half of this year. The group is now seeking permits from the Environmental Institute of Rio de Janeiro and a construction permit from the city hall.

Mr. Izquierdo said that after the agreement with Marriott, the group will launch in the next months a hotel real estate fund focused on qualified investors to raise funds. The idea is to also seek international contributions. About 40% of the project should be raised through the fund, and the rest will come from debt. “We are studying the support of banks such as the development bank BNDES and IDB, and we also believe in the support of other financial institutions”, he said.

According to De Kousemaeker, the luxury lodging sector in Brazil is still evolving. “In markets where we do not observe an oversupply problem, we already see potential to induce new demand and some luxury hotels achieve high rates in local currency, when compared to other destinations in the region,” he said.

Despite its natural beauty and strong culture, Brazil has been unattractive to international tourism. According to data from the World Tourism Organization, Brazil ranked number 49 in 2018 in the number of international tourists, with 6.6 million. France, which leads the ranking, received 89 million that year.

The entire Maraey project encompasses 840 hectares, 6.6% of it with buildings. The total private investment will be around R$11 billion. The idea is that it will become a true luxury city, with more than 8,000 high-standard homes and services.

*By Cristian Favaro — São Paulo

Suppliers want to receive cash for new deliveries; shopkeepers fear drop in sales


Americanas contacted sellers on Monday to reassure them about possible risks — Foto: Dado Galdieri/Bloomberg

Americanas contacted sellers on Monday to reassure them about possible risks — Foto: Dado Galdieri/Bloomberg

Americanas already faces difficulties negotiating with large suppliers and insurers, sources say. Among small shopkeepers who supply its online marketplace — the company’s largest business — lawyers have guided them to divert sales to other platforms to protect themselves against possible issues in the operation.

Some fear that the company will lose customer traffic online — after the crisis became public — and that this will lead to a cascading effect: fewer people visiting, who buy less, which ends up leading shopkeepers to reduce their actions on the group’s platform.

On Monday, several meetings took place between manufacturers and their legal departments, and also between marketplace vendors and their lawyers. In the last hours of the day, Americanas contacted sellers to reassure them about possible risks.

Among some durable goods industries, it was adopted on Friday, the policy of authorizing the sale through a contract for a cash payment of the purchase — Samsung has already followed this path.

According to three sources, international credit insurers have reduced the limits of the credit line for guarantee operations for industries selling goods to Americanas. The supplier protects itself from payment problems from retailers, so the risk is on the insurer.

Mapfre reduced the company’s line on Friday, which was available for industrial companies to close sales, sources say. Insurers working for LG, Motorola, and Samsung have adopted the same practice. Those limits can be adjusted automatically. Mapfre, Samsung, LG, and Motorola declined to comment.

“They have a very low tolerance for scenarios like this, including because they have already experienced losses at retailers in other emerging markets. Americanas is not a relevant partner [in durable goods], it is not very strategic for those brands, which would even help now to postpone a little bit these revisions in the lines,” says a person familiar with the matter.

Multinational manufacturers do not sell without being insured for close to 100% of the value, which guarantees 100% of the receivables. Some insurance companies accept to open lines with 70% and 80% coverage, but only when the client has very low risk — unlike Americanas today.

In September, Americanas had 107 days of products in inventories, an increase of 11 days compared with the second quarter, but this volume usually falls right after Christmas. In periods of low seasonality, they range from 80 to 90 days. In product lines that retailers call “curve A” — of high turnover –, such as television sets and cheap cell phones, the average stock at retail ranges from 40 to 50 days, sources say.

“There is information that electronics suppliers have frozen new orders until they understand how the payment of the new bills will be,” says a source linked to the industry, who cited the provisional measure that protects Americanas from creditors for 30 days.

After Friday’s provisional measure, the due date for new deliveries is normal. In a sale made before the measure, Americanas may not pay, because the credit is subject to future judicial reorganization, which Americanas may file for after 30 days, said two lawyers who analyzed the measure.

“But the industrial companies can’t bring forward expiration of anything from the past,” says the lawyer of a retailer that once asked protection from creditors. “And in new contracts, suppliers can require to receive cash, and that is likely to be their move,” the lawyer said.

The text of the request states that among the protections for the company is “the preservation of all contracts necessary for the operation of Grupo Americanas, including credit and supply lines.” In other words, industrial companies and sellers could not cancel contracts unilaterally.

Regarding the marketplace, Americanas’s online competitors see, since Sunday, a certain increase in inventory in their systems, and believe that part of it comprises sellers who reduced lots for sale in Americanas’s websites (the group operates businesses such as Shoptime and Submarino as well).

About 65% of Americanas’s sales happen through the online marketplace (third-party products). The remainder refers to products from its own inventories. The company has more than 150,000 merchants registered on the platform. Online marketplaces are maintained by revenue from services sold to merchants – the greater the flow, the greater the revenue.

Valor found out that Americanas teams informed Monday, in calls to shopkeepers, that sales are normalized, in “good pace,” and that the company will not change the conditions of their contracts. The lines of factoring of receivables had no changes until Monday.

In practice, the funds from shopkeepers’ products sold through online marketplaces are “locked” in a closed account, which the platform cannot block, according to a system created a few years ago to protect digital transactions. For the website, only the commission fee is free. But some shopkeepers fear that Americanas will raise commissions or increase deadlines for the release of funds from the sale of their products. Today, the value is released every two weeks.

Americanas said it “maintains the normal flow of transfers in its online marketplace and paid sellers normally on Monday.” In a note, the company said that “the operations continue in the same way, both for small partners and for industrial companies that use the company’s platform.”

Three law firms heard by Valor, which are being consulted or hired by the online marketplace’s shopkeepers, have advised clients to keep their contracts to avoid possible questioning in court, but to also review conditions.

“The agreements will be maintained, but the conditions are of autonomy of the sellers,” says a lawyer consulted today. “That is the guidance we have given to the sellers.” This means that the shopkeeper can change, in his account of products sold on Americanas, the amount they charge for freight, product price, and the number of items for sale on the platform.

*By Adriana Mattos — São Paulo

Source: Valor International
José Roberto Mendonça de Barros says new administration must define a fiscal anchor and send tax reform to Congress


Jose Roberto Mendonça de Barros — Foto: Silvia Costanti/Valor

Jose Roberto Mendonça de Barros — Foto: Silvia Costanti/Valor

Economist José Roberto Mendonça de Barros says that the fiscal package announced by the economic team is “positive, welcome, and healthy.” But it represents the first step. It will be necessary to move forward in cutting expenses, and not only in increasing revenues. It is also necessary to present a rule that will serve as the country’s new fiscal anchor, and send the tax reform proposal to Congress.

“The ministers of Finance [Fernando Haddad] and Planning [Simone Tebet] have explicitly taken on the idea, which is very welcome, that they will try to keep the [primary] deficit between 0.5% and 1% of GDP,” said Mr. Mendonça de Barros, a partner at the MB Associados consultancy and former secretary of Economic Policy at the Ministry of Finance in the Cardoso administration. “If they hadn’t started with such a bold transition package, there wouldn’t see all this stress.”

He says, in an interview with Valor, that the Lula administration starts with a truly “cursed inheritance”: an inflation higher than 9% in the pocket of a large part of the population, well above the official index, of 5.8% for 2022. The full rate was lower due to tax cuts, which, however, do not benefit those who do not drive a car and pay the social tariff for electricity.

“This inheritance is complicated,” he said, and “increases the risk of difficulties between the Finance Ministry and the Central Bank.” According to him, it creates difficulties to take fiscal adjustment measures, such as the end of the tax relief on gasoline. On the other hand, it puts the Central Bank under pressure.

In his view, the Lula administration will face a very complicated economic scenario in the short term, with the deceleration of the world economy and a likely drop in commodity prices after March. But he sees opportunities thanks to two major trends. One is the relocation of factories from China to other parts of the world, a consequence of geopolitical tensions with the United States. The other is the decarbonization of the world economy.

“It won’t be easy,” he said. “If you start wanting to bring corpses from the industrial policy, like building refineries, naval program, chip factory, then I think it gets really complicated.”

Mr. Mendonça de Barros spoke to Valor twice, once before and once after the announcement of the government’s fiscal package. Read below the main excerpts from the interviews:

Valor: What is your view of the first days of the Lula administration?

Jose Roberto Mendonça de Barros: The Lula administration faces an enormous challenge, given the international economic situation and the inheritance received from the previous administration. I worked in the Fernando Henrique Cardoso administration, which left a blessed inheritance, which was unfairly called cursed. It was not. It was a blessed inheritance, also because of the civilized transition that was made. I believe that the government can see what a complicated inheritance is all about.

Valor: How do you see the international environment?

Mr. Mendonça de Barros: It is the most complicated scenario of the last decades. We have a strong deceleration of global growth. It is a rare combination of non-economic shocks with economic shocks, equally significant. Chronologically, it started with Covid, a huge supply shock at the height of globalization. It was inflationary pressure throughout the Western world, including Brazil, with an unprecedented fiscal and credit expansion. This response took place for understandable reasons, but in such a big way that it produced a demand shock. Then inflation came, which was an unavoidable consequence.

Valor: Will this still reverberate in 2023?

Mr. Mendonça de Barros: Yes, it will. Central banks were slow to respond. Brazil moved first, but after being a long time behind the curve. The U.S. central bank was a year behind the curve. Only now, in the last six or eight months, has the interest rate started to be high enough to knock down demand and bring inflation down. That’s not over. The discussion about the economic situation is about how far the Fed will go, whether it will raise rates by 25 basis points or 50 basis points at the February meeting. We, at MB Associations, think that it will go to 5% or 5.25% a year, at least. There is a long way to go.

Valor: In the past, the monetary tightening cycles had an impact on the exchange rates. What is going to be the channel that is going to hit us?

Mr. Mendonça de Barros: It was a different moment for us. It is always interesting to compare with Argentina. Ten years ago, we took a different path from Argentina because we had very large foreign exchange reserves. In Argentina, until today, the dollar is hand to mouth. When there is a shock abroad, inflation explodes. Here in Brazil, not anymore. The increase in commodity prices caught Brazil with a very positive capacity to increase exports. This was perceived in a very strong way last year, to the extent that the GDP was systematically higher than initially projected.

Valor: Will this trend continue in 2023?

Mr. Mendonça de Barros: Our scenario is that after March, the end of the Northern Hemisphere winter, commodity prices will fall. Demand is finally starting to fall worldwide, with the interest rate effect in the United States and Europe. China doesn’t have inflation as a problem, but it does have the Covid disaster. It has global GDP projections of less than 3%, which is very low. Absorption is going to be lower, and commodity prices tend to fall. It will be from March onwards, first by [reduced] seasonal demand for oil, although the temperature is higher than usual. In the case of food, the balance between supply and demand depends on the Latin American harvest.

Valor: Why this dependence?

Mr. Mendonça de Barros: We have the second non-economic shock in 2022: the world experienced the hottest year in history. The heat was so great that there were harvest losses in the Northern Hemisphere. And in Ukraine, you have the war, which is the third non-economic shock. The crop was not bad, but it makes the stock at the turn of last year to this year relatively low. As far as planting in Brazil is concerned, there is not going to be a problem, because we planted for a record harvest. However, it is another year of La Niña, which provokes a rainy spring. It rains well in the North and Northeast regions, but there is a lack of rain in Rio Grande do Sul. In Argentina, the weather is a disaster, they have already lost a portion of their crop, especially wheat. Brazil’s harvest will be very good, but there may be a little bit of a shortfall, as happened last year. So, this year we will no longer have this great income boost. In the last two years, a lot of tax was collected because of more expensive commodities.

Valor: How do things evolve in the medium and long term?

Mr. Mendonça de Barros: There is a geopolitical dispute between China and the United States, with many consequences, and one is the use of trade policy as a weapon. I’m talking about chips and the prohibition of direct and indirect exports from U.S. companies. We have Covid in China, which is leading companies that do not depend on the Chinese market for so-called reshoring. Part of the production is going to South Asia, part to Mexico, part to Eastern Europe itself. We have to keep an eye on this, especially in the Brazilian industry. And the other thing is the energy transition that runs in parallel. Energy transition is going through a paradoxical moment. Europe and a good part of the countries in the world have gone backward in energy because they are using coal, they are using what they have at hand. But it’s making us even more certain that we have to move forward in the energy transition. This puts us in a good position if we know how to take advantage of it.

Valor: And what about Brazil’s domestic economy?

Mr. Mendonça de Barros: Activity is slowing down. In the last quarter of last year, activity will be much weaker than in previous quarters. 2022 GDP is going to grow by 3%. But if you look at this year, everyone is working with something between 0.5% and 1%. We have 0.8%. These sources of growth from the past are going to be weakened or have the opposite sign. Interest rates are very high, at 13.75% per year, and the injection of income from abroad is going to be lower. Demand is starting to fall, defaults are rising. The service sector, which was the driving force behind the activity, is starting to slide. We enter this year with the GDP slowing down, but with very worrying inflation.

Valor: Can inflation complicate the new administration?

Mr. Mendonça de Barros: This is a truly cursed inheritance. When you look at full inflation, it is 5.8% in 2022, but the average of the inflation cores is above 9%. There are two major price groups. You have those that received tax breaks. For those who didn’t get a tax incentive, the [price] increase is much higher. The real inflation, for those who don’t have a car and pay the social energy tariff, is 9%. That is also why poverty increases. This inheritance is complicated. The minister of finance wanted not to renew the fuel tax relief, and the political wing of the government wanted to renew it to avoid a price shock upon arrival. The tax waiver costs R$50 billion per year. The Ministry of Finance was correct when it advocated the end of waivers.

Valor: Would this technically correct solution be politically possible, with radical groups in the streets?

Mr. Mendonça de Barros: I admit that increasing the price of diesel from the outset would be complicated, but not gasoline. Tax relief for gasoline is a subsidy to the middle class, it harms ethanol, it is an anti-environment measure, and it accounts for a great part of the lost tax revenue. It is possible to understand what the demand is from a political standpoint, but it was a mistake. Two months from now, if the gasoline tax is changed, I don’t know whether they will face the same problem or not. Here, inflation complicates things. The worst thing about this inheritance, in inflation, is this asymmetry that was built in a totally artificial and populist way. This increases the risk of difficulties between the Finance Ministry and the Central Bank.

Valor: What do you think of the fiscal measures announced by the economic team?

Mr. Mendonça de Barros: The Transition PEC (proposal to amend the Constitution), which leads to a primary deficit of more than 2% of GDP and strong growth in the debt-to-GDP ratio, would be destabilizing. The ministers of Finance and Planning have explicitly taken up the idea, which is very welcome, that they will try to keep the [primary] deficit between 0.5% and 1% of GDP. Why is this reasonable? All the analysts, since last year, already thought that a figure between R$80 billion and R$100 billion was reasonable. This was the waiver [to spend above the cap], which would mean something between 0.7% and 1% of GDP. If they hadn’t started with such a bold transition package, there wouldn’t see all this stress. But then, it is positive, welcome, healthy, but it is partial.

Valor: Why?

Mr. Mendonça de Barros: Because what we can put some security on are four items linked to tax collection. The first is PIS Pasep, which is legally authorized to be legitimately credited as government revenue. This means R$23 billion. And then, the expectation of the return of the gasoline tax, which is estimated at R$29 billion. This should already be there, but it was postponed, for political reasons. If it comes in March, better late than never. It is also money the proposal related to the Supreme Court’s decision that forbids the use of ICMS credits to purchase inputs. The estimate is R$30 billion. There is a revenue re-estimation in the budget, which everyone imagined could happen because inflation will be a little higher than initially thought. This comes to something close to R$20 billion, R$30 billion. Adding it all up, this part really brings in R$80 billion or R$90 billion in revenue. This is enough to bring the deficit down. It might be a little more than 1% of GDP, but it is already a good start.

Valor: What else remains to be done?

Mr. Mendonça de Barros: Three things are also explicit in the remarks of the ministers. First, a review of spending. We have a tradition of being a little suspicious of spending reviews because, in the past, many times promises were made and nothing happened. But now we believe that things can happen, like the revision of the Federal Unified Registration. There have been so many facilities in this recent period that there really is a way to have some expenditure. The second complementary point, and everybody knows that, is the new fiscal policy. We have to have a discussion by, say, April. We have to show what this fiscal rule is, that it is technically well organized and credible. The third point is tax reform, especially VAT [value-added tax]. This would mean a significant step in the right direction.

Valor: Minister Haddad said that his fiscal plan is a letter to the Central Bank. Has the tension between the Central Bank and the Finance Ministry started?

Mr. Mendonça de Barros: It is present. The two entities have the same objective, but they are going to have to develop a way of working in a complementary way. It is the first time that a newly elected government is installed with an independent Central Bank by law. Hence the image of the cards, on one side and on the other. I understand this as a learning process of coexistence, in a different institutional situation, with a complex inflation situation. That is why the markets understood the situation, nobody got nervous.

Valor: Would tax reform be a way to help rebalance the public accounts?

Mr. Mendonça de Barros: I think [it is important] not so much for the impact on short-term tax collection, but rather on the expectation and the medium-term message for attracting investments. This administration may have a combination of two very powerful things. One is the new stance towards the environment. If this is combined with a message of progress in tax reform, then we can say that we may have a significant increase in investments. But then we have to add something else that worries us, besides the fiscal part, due to past experience, which is the industrial policy. If at this moment, at the same time, we want to bring in the corpses of the industrial policy, like building refineries, naval programs, chip factories, then I think it gets really complicated. To review the sanitation framework, to review things that we have advanced.

Valor: In the first week, there was a lot of doubt about what the direction of the Lula administration was going to be, with conflicting remarks. Afterward, there was an attempt to unify the message. Will it be a government with a unified line?

Mr. Mendonça de Barros: There will be no unified message. The very assembly of the government team does not go in this direction. You have many people with different views. It will be even worse if the hegemonic tendency of the Workers’ Party manifests itself. There is an enormous opportunity. You see, the performance of the previous administration was so bad in health, education, environment, science and technology, and foreign relations, that this is an extraordinary opportunity. As a great financial market operator told me, the world is anxious to buy Brazil. They want to buy Brazil because the emerging world is all messed up. But, for God’s sake, you have to give them a reason to really buy.

*By Alex Ribeiro — São Paulo

Source: Valor International
Investment funds participation in business drops to 23.7% from 35% in 2019


In a scenario of high real and nominal interest rates, with no prospect of a reversal in the short term, and still suffering from withdrawals from shareholders, the institutional investor — in this case, basically investment funds — has progressively shrunk its share in the Brazilian stock market. After reaching a peak, when accounting for a 35.2% share of business in 2019, the category saw its participation reduced to 23.7% on the 11th — the lowest percentage in 12 years, shows Valor Data survey.

The movement is opposite to that of foreign investors. More optimistic with Brazil — and with emerging markets as a whole — due to the reopening of the Chinese economy and the weakening of the dollar with a possible end of the tightening cycle of the Federal Reserve, international players now report 55.8% participation in the stock market, the highest level since 1994 — in 2019, this share was 42.6%.

The balance of contributions by non-residents in the secondary segment of B3 in the year already amounted to R$1.54 billion until the 11th, while the institutional investors accumulated withdrawals of R$965.9 million. Last year, the balance was R$100.8 billion positive for foreign investors and R$142.5 billion negative for the second group.

Part of the institutional investors’ movement is explained by the performance of the domestic fund industry last year, when there were redemptions in all modalities — R$158.1 billion in multimarket and stock funds, and another R$48.9 billion in fixed income funds. In other words, asset managers had to act in the face of this scenario.

Institutional investors temporarily returned to the stock market in the third quarter of 2022, precisely when the expectation for cuts in the Selic, Brazil’s benchmark interest rate, was more accurately priced by the market. But this was reversed after the first signs of the new administration, whether in the fiscal area, with the Transition PEC (the proposal to amend the Constitution), or in the assembly of the economic team, more political than the market wanted.

Joaquim Kokudai — Foto: Silvia Zamboni/ Valor

Joaquim Kokudai — Foto: Silvia Zamboni/ Valor

“I believe that the current positioning reflects what was already outlined in the election, with foreign investors preferring the new president and local investors wanting the incumbent’s reelection. The formation of the economic team and the first fiscal measures did not help either. Now, the Brazilian funds have developed this more cautious view, even if it is still too early to say that we will not have fiscal anchoring or something along this line,” said Joaquim Kokudai, head of Somma Investimentos.

In the executive’s view, if the new administration had taken better advantage of the initial days, the environment would be more favorable to enter the stock market now. In addition, despite having difficulties seeing any movement in the basic rate other than downwards, he says that the market will probably need more robust fiscal signals to price this.

Attractive stock prices don’t attract local investors as much, says Fabio Spinola, founding partner and manager of Apex Capital, because of the high interest rates in Brazil. “The foreigner doesn’t have an opportunity cost of 13.75%, which is the Selic rate. His opportunity cost is the American interest rate,” he said. “We were pricing interest rate cuts in the middle of the year, now we believe it will be at the end of the year, but in a small magnitude and subject to revision.”

According to Mr. Spinola, however, when the Minister of Finance, Fernando Haddad, starts to make clear the fiscal framework with which he will work, this should reduce the risk premiums that are high now because of the uncertainties. He also points out that this effect may be smaller for foreigners, who keep in mind the pragmatism of both previous Mr. Lula administrations, between 2003 and 2010.

He also approves the stronger presence of international investors in the Brazilian stock market — even pointing out the difference between the foreign investor, who studies the companies closely, and the trader, who usually buys indexes or more liquid companies. “I see the investor with good eyes. It’s like I’m saying that the local doesn’t have to be so negative. And you have to be careful because the market is so pessimistic that there could be a bullish move and the local investors won’t participate.”

Luiz Alves, manager of Versa Asset, believes that interest rates will need to fall because of the recession that is expected to occur this year. He projects that there will be a strong drop in activity already in the fourth quarter and, as much as there is an idea of maintaining rates, the recession will contain inflation, and interest rates will have to fall. “Then, if there is fiscal convergence by the Treasury, which is not so difficult, and the tax reform advances, we will have a favorable environment for the stock market to move forward,” he added.

However, even if there is a revision in profits in 2023, reflecting the projected recession, Mr. Alves believes that there is room for the much-vaunted repricing of local stocks, with investors projecting better numbers for 2024. He states that he currently operates with almost no cash on hand and maintains a strong position in retail, despite having increased his exposure to the financial and commodities sectors.

At Apex Capital, the long-only funds (which always bet on the appreciation of the stocks they invest in) are well allocated, with low cash: “I think there are a lot of cheap things, so I have little cash,” says Mr. Spinola. On the other hand, there is room to increase the long-short funds (who seek to gain both in the rise and fall of certain assets), if there is good clarity.”

According to him, the allocations of the moment are more defensive. “If we get into a more credible fiscal trajectory and a stronger possibility of interest rates falling, we can get more into cyclical companies, sectors like retail. We don’t have this today. We are more exposed to commodities, and in the financial sector,” said Mr. Spinola.

With no mandate to invest in the stock market, Rodrigo Melo, chief strategist of ASA Hedge, a multimarket fund from ASA Investments, says that the positioning in this modality is not only below historical levels, but negative. In the local market, he has what he calls a “double-carry” position, in which he operates long (betting on the rise) in the BRL, which has been helped by the interest rate differential, and short (betting on the fall) in the stock market. In the U.S., it is overbought (forecasting a rise) in interest rates and sold in the stock market.

ASA Investments did not invest in companies listed on the B3, not even in the commodities sector, one of the few that performed on the Brazilian stock exchange in 2022. “Before we even made directional investments in the companies, now we are trading the products directly. After the recent correction, for example, we added oil to the portfolio,” said Mr. Melo. “Our view doesn’t mean that no multimarket manager has a stock market, but it doesn’t seem to us a very favorable environment to make this move now.”

*By Matheus Prado, Augusto Decker — São Paulo

Source: Valor International

Some companies even consider making investments to ensure greater sugar production in the next harvest


Uncertainties about what the Lula administration’s policies for fiscal balance, monetary policy, fuel pricing policy, and fuel tax policy will look like, in addition to doubts about the direction of the foreign exchange rate, are causing concern among sugarcane mills. As these factors tend to impact the ethanol market more immediately, sugarcane mills are already indicating that they could prioritize sugar production as a safe haven three months into the new harvest (2023/24).

According to Willian Hernandes, partner at Ribeirão Preto-based consultancy FG/A, there are even mills considering making investments to ensure greater sugar production capacity already in the next harvest, if necessary. “This [political] indecision is bad for [business] decisions. In this current tax scenario, making adjustments for sugar production to become larger is eminent,” he said.

An investment like this, however, can only be translated into effective production increase in at least six months – that is, if an investment decision is made now, it will only be reflected in increased sugar production from July on, at least, according to Ricardo Pinto, a partner at consultancy RPA.

As there are still many mills with idle capacity, this capacity may be filled by directing the largest supply of cane to sugar. But the capacity to reduce the ethanol supply is limited, says the consultant. “It is difficult to have big changes in volume only with mix adjustments.”

The record sugar production in the South-Central region was 38 million tonnes in the 2020/21 harvest, when the pandemic broke out, hitting the fuel market hard. At the time, the mills ended up directing all their production to sugar, for which there was still some demand. The two following harvests were shaken by drought and frost, but the consultants expect a resumption of the cane harvest in 2023/24.

The climate of uncertainty grew after the government published the provisional measure 1,157/2023, which postponed for two months the federal tax relief on fuels to allow time for reviewing the pricing policy. It is not known whether, after these two months, ethanol will recover the same special rate compared to gasoline as before the tax changes – as foreseen in the constitutional amendment approved last year – nor if and what will be the level of gasoline price control by Petrobras under future CEO Jean-Paul Prates.

The biggest fear of the mills is a repeat of what happened under President Dilma Rousseff, when domestic gasoline prices were kept well below international levels, which were high at the time, making it difficult for hydrous ethanol to compete at the pumps – and even affecting the sugar market because of the preference of mills to produce more of the sweetener.

An executive from one of the largest companies in the sector, however, told Valor on condition of anonymity that there may be an intermediation with Mr. Prates’s proposal for a price stabilization account. The alternative, however, still holds uncertainties and is expected to take a while to consolidate, creating a cloudy horizon in the first months of the harvest.

The mills are still studying whether to file a lawsuit against the federal government in case the tax relief is extended. But a normalization of the tax policy is not likely to change the scenario either. “Even if taxes on gasoline are resumed, ethanol price is unlikely to be higher than sugar price,” said Tiago Medeiros, director of the trading company Czarnikow.

The uncertainty is also causing caution in hedging, which is within the historical rate for this time of year. At Czarnikow, 65% of sugar exports for the next harvest are hedged, and 10% of exports for the 2024/25 harvest as well.

“The hedge, as much as it is a protection, brings uncertainties related to the cost, to the total return of the business, considering an ethanol scenario maybe less interesting with price controls put in place by Petrobras. The result is inaction,” said Mr. Medeiros.

The demerara sugar future contracts traded on the New York Stock Exchange that foresee deliveries during the harvest period in South-Central Brazil (for July and October) have also shown less attractive prices than the mid-crop contracts expired last year.

*By Camila Souza Ramos — São Paulo

Source: Valor International
Lower value of iron ore brings Chinese share down to 26.8% from over 30%


After reaching a share of over 30% in 2020 and 2021, China’s share in Brazilian exports fell to 26.8% last year, especially because the value of iron ore shipped dropped. The share is also lower than in 2019, when the Asian country absorbed 28.7% of Brazilian exports. Still, China remains the main destination of Brazilian exports, followed by the United States, with 11.2%, and Argentina, with 4.6%.

Experts believe that China will recover its share in Brazilian shipments in 2023, but partially, within a general landscape of expected slowdown in the global economy.

Compared to 2021, the U.S.’s share in Brazilian exports remained stable, with an increase of only 0.1 percentage point. Argentina, which is expected to be the first country officially visited by President Luiz Inácio Lula da Silva, advanced 0.4 percentage point, but is still far from the 7.5% reached a decade ago.

With the drop in shipments to China, the trade surplus with the Asian country totaled $28.97 billion in 2022, equivalent to almost half of Brazil’s total surplus of $61.76 billion. Despite being robust, the China-Brazil trade surplus was lower than in 2021 ($40.26 billion), when the Asian country accounted for two-thirds of Brazil’s total surplus of $61.41 billion.

The 4.5 points of difference in China’s share were spread among several trading partners. Besides countries in Asia, such as India and Singapore, the European Union and Latin American countries like Chile, Mexico and Colombia increased their shares. In all these destinations, Brazilian exports increased more than the 19.1% of the average of the country’s total shipments, data by the Ministry of Development, Industry, Trade and Services (MDIC) show.

The shipments to the Chinese also grew, but at a slower pace, only 2.1%. The result can be explained mainly by iron ore, the second item most purchased by China. The Asian country absorbed $18.2 billion in Brazilian iron ore in 2022, down 37% year-over-year, because of lower prices after a peak in 2021. With the retreat, Brazilian ore exports virtually returned to the level of 2020, when the country shipped $18.5 billion.

Besides the effect of the ore price in 2021, China also gained space in Brazilian exports in 2020, when the pandemic hit. That year, the Asian country grew amid a widespread global recession, which also makes the base of comparison high and explains the lower growth of the Chinese appetite in 2022. The situation was different last year, with evidence of greater difficulty in the economic recovery of the Chinese economy.

Also in 2023, the performance of the Chinese economy is an important variable for the evolution of Brazilian exports, said economist Livio Ribeiro, a partner at BRCG Consultoria and researcher at the Brazilian Institute of Economics of Fundação Getulio Vargas (FGV/Ibre). In his view, China may regain a part of its share in 2023, but not all of it.

Despite general expectations in relation to the Chinese economy due to the recent decision to end the zero-Covid policy, Mr. Ribeiro still sees Beijing with difficulties to advance in the recovery of the domestic economy. In his view, the growth of Brazilian exports to China is likely to be driven more by iron ore and corn, a relatively new and rising item on the export list to the Asian country. But proteins, such as meat in general and soy, items more linked to family consumption, are unlikely to advance too much, he said.

The Chinese government’s policies to stimulate the domestic economy, he said, focus on investments. “But this China, today, is smaller than the China that consumes. As long as there is no decision to encourage consumer spending, there won’t be such a rapid movement to accelerate China’s growth.”

Sergio Vale, the chief economist of MB Associados, believes that the Chinese economy will be able to grow nearly 4% in 2023, with short-term stimulus measures. But this depends on how Covid-19 cycles will play out, he added. Depending on the effects of the disease’s impacts, the rate could fall to 3%. In Mr. Vale’s view, China’s consumption of Brazilian products, however, can benefit from the lower prices of iron ore, which will also have export values adjusted, in addition to a good Brazilian grain harvest.

In addition, he said, an advance in China’s share is likely to happen because, even with a slowdown, the Asian country is expected to grow in a scenario of sluggishness and a potential recession in important markets such as the United States and Europe.

Considering the expected global scenario of deceleration, José Augusto de Castro, head of the Brazilian Foreign Trade Association (AEB), projects for 2023 exports of $325.2 billion, which would mean a drop of 2.9% year-over-year. In this context, even if China maintains the level of demand for Brazilian items, it may gain ground in Brazilian shipments.

The 2022 scenario, he said, shows the reliance of Brazilian exports on agricultural or metallic commodities. Last year, despite the decrease in ore shipments, there was an advance in soybean and oil, the latter item driven mainly by price increases due to the Russia-Ukraine war. The three items, he said, probably accounted for 35.7% of Brazil’s export revenues last year, similar to the 35% in 2021.

Last year, the rise in oil prices also contributed to the advance of Brazilian exports. The sale of crude oil grew 39.5% and its share in Brazilian exports rose to 12.7% in 2022 from 10.9% in 2021 – it is very close now to the 13.9% share of soybeans.

The greater share of oil contributed to changes in the destination of Brazilian exports. The MDIC data highlights the rise of Singapore in recent years among the largest destinations of Brazilian products. In 2022, Singapore ranked seventh, with an increase of 43.4% in the purchase of Brazilian products in relation to the previous year. Although the advance is not new – the country’s share of Brazilian shipments increased to 2.5% in 2022 from 1.3% in 2019 –, oil exports also help explain this growth.

Of the $8.35 billion that Brazil sold to Singapore in goods in 2022, $5.9 billion was crude oil. Such a high volume, said Mr. Castro, suggests that the country re-exported Brazilian products to other countries in its region.

*By Marta Watanabe — São Paulo

Source: Valor International