Read this Thursday’s edition of the FolhaMercado newsletter (16) – 03/16/2023 – Market

Read this Thursday’s edition of the FolhaMercado newsletter (16) – 03/16/2023 – Market

ANDsta is the edition of newsletterr FolhaMercado this Thursday (16). want to receive it from monday to Friday at 7 am In your email? Sign up below:

Another sour day in global markets generated by a banking crisis.

On Wednesday, shares of Credit Suisse plummeted nearly 25% on the Zurich Stock Exchange, amid questions about the bank’s financial health and a growing fear of contamination generated by bank failures in the US, which is now reaching Europe.

  • Hours later, the bank said it would borrow about $54 billion (50 billion Swiss francs, or BRL 284 billion) from the Swiss BC, in what he called “decisive action” to strengthen its liquidity.

What explains the new credit crisis

The bank on Tuesday released a report indicating misstatements in its financial statements. PwC, its auditor, had included in the report an “adverse opinion on the effectiveness of the group’s internal control over financial reporting”.

  • Investors’ aversion was aggravated this Wednesday, after the chairman of the board of Saudi National Bank, the bank that is the company’s largest shareholder, ruled out the possibility of injecting more capital into Credit.
  • Last week, the Swiss bank had already postponed the presentation of the annual report after the SEC (American CVM) questioned the cash flow figures.

Credit Suisse has been accumulating a sequence of crises in recent years, which is reflected in its shares, with an 83% drop since March 2021. The most recent scandal was in 2022, amid rumors on social networks about the need for capital to bank restructuring.

  • The reorganization plan is being carried out by CEO Ulrich Koerner and involves the reformulation of the investment bank arm (mergers and acquisitions, capital markets and share issues), considered more loss-making.
  • Layoffs numbered in the tens of thousands.

In the Brazilian market, Credit Suisse operates mainly in the areas of wealth and asset management.

Opinion: we are in first stage of a financial crisis of uncertain duration and size, writes columnist Vinicius Torres Freire.

The impact on markets

The Credit Suisse crisis that hit the global markets also reached Brazil and pushed the Ibovespa during the trading session to the level of 100 thousand points, the worst recorded since July 2022.

At the end of the day, however, the Brazilian Stock Exchange followed the American and stopped the fall after the Swiss BC indicated aid to the country’s bank. Around here, the news that the new fiscal framework has already been delivered to the Planalto also helped to calm spirits.

In numbers: the Ibovespa closed at a low of 0.25%, at 102,675 points, the worst level since August. The dollar, which hit R$5.32 at the height of the panic in Europe, closed at a high of 0.72%at BRL 5.29.

  • In Europe, the largest stock exchanges closed before the Swiss BC’s announcement and retreated, pulled by the actions of banks. Euro Stoxx 600 crashed 2.92%. The London Stock Exchange’s FTSE 100 index closed down 3.83%.

European banks almost lost $75 billion in market value this Wednesday alone, according to the Wall Street Journal. Société Générale and BNP Paribas fall 15% It is 12%respectively.

  • The fear there is that the eventual collapse of a large bank like Credit Suisse could take others from the continent along with it, given the interconnection between these institutions.

In the USA, First Republic shares plummeted again and fell 21%, in a sign that the fear of financial contamination continues there. The CEO of BlockRock, the world’s largest asset manager, said that this effect cannot be ruled out.

  • The regional bank came to the fore after the fall of Silicon Valley Bank and its shares are on a roller coaster: they plummeted 60% on Monday, then jumped 40% on Tuesday.

Offensive against Asian websites

Parliamentarians from the Joint Parliamentary Front for Entrepreneurship criticized Minister Fernando Haddad this Wednesday for what they considered “digital smuggling” by Asian websites, including retailer Shein.

Understand: for deputies, these stores sell products without taxation or underpriced in the country, harming national industry and commerce, which are taxed along the production chain.

  • They claim that foreign platforms would be using the exemption benefit for exchanges between individuals, as long as the value of the merchandise is below US$ 50, to avoid import tax.

The critic from national industry to Asian sites is not new and goes beyond textile retail, finding echoes in businessmen from other sectors, such as electronics, toys and large retailers, who characterize competitors as “digital street vendors”.

Who is Shein? considered the “Zara of China”, it has thousands of low-cost models and has revolutionized fast fashion, which is characterized by the high turnover of collections.

  • The secret is in its AI (artificial intelligence), with an algorithm that tests in the application with 100 to 200 parts per model. If the demand for a certain product is heated, the robot captures the trend and production is automatically scaled.
  • In November last year, Shein (pronounced xi-in) opened its first (temporary) pop-up store in Brazil, in a mall in São Paulo, for five days.

QuintoAndar + Lopes

Lopes and QuintoAndar, two major players in the Brazilian real estate market, announced this Wednesday a partnership to share their property portfolios for sale and lease.

Understand: with the agreement, the properties available on the QuintoAndar website will also appear on the Lopes website, and vice versa.

  • The union will result in 400,000 properties for sale and for lease and on sites that, together, receive more than 30 million hits per month, according to the companies.
  • For the time being, the partnership begins to take effect in São Paulo, Rio de Janeiro, Belo Horizonte and Porto Alegre and their metropolitan areas.

The operations of Lopes and QuintoAndar will remain independent.

Who is who

  • Lopes: leader in the real estate franchise segment in Brazil, with 182 real estate agencies in 21 states and the Federal District. It has shares listed on the Stock Exchange since 2006.
  • Fifth floor: real estate startup that was valued at $5.1 billion in August 2021, when the money flow to startups was at its peak. In the first half of last year, when the scenario was reversed, it cut around 170 employees in a wave of layoffs.

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