Retail stocks fall with drop in international taxation – 04/18/2023 – Market

The retail sector was one of the negative highlights of the Exchange this Tuesday (18). The main reason for the performance of the shares was the government’s withdrawal from the intention to charge taxes on international purchases of up to US$ 50, which mainly targeted Chinese platforms such as Shein and Shopee.

President Luiz Inácio Lula da Silva’s (PT) decision to resume the exemption for international remittances of up to US$50 had as a backdrop the president’s refusal to penalize the poorest layer, in addition to a dose of pressure from the first lady , Rosângela Lula da Silva, Janja.

This Tuesday morning, the Lula government announced the withdrawal and maintained the exemption for international remittances of up to US$50 from individuals to individuals.

Among the ten biggest falls on the Ibovespa this Tuesday were the common shares of Lojas Renner, with 4.12%, of Magazine Luiza, with 3.28%, and the preferred shares of Alpargatas, which manufactures and sells shoes, with 2. 95%. Out of the index, C&A’s common stock stands out, which fell 3.31%.

Fabio Louzada, economist and founder of Eu me bank, points out that the government’s withdrawal from taxing small international purchases had a direct impact on stocks. “Brazilian retail companies could benefit if the exemption ends”, he says.

Louzada also points to the recent rises in future interest rates, which end up pointing to a retraction in credit and lower consumption.

Piter Carvalho, Chief Economist at Valor Investimentos, says that retail was already suffering from Chinese competition. “What seemed to be a relief for a sector that already suffers from high interest rates ends up becoming yet another factor of difficulty. Companies are being beaten from all sides”, says Carvalho.

The fall in shares in 2023 proves that the year has been difficult for the sector. The common stock of Lojas Renner accumulates a drop of more than 21%.

Denis Medina, economist and professor at the Faculty of Commerce, says that the impact of the measure on the government’s tax collection was questionable. “If you calculated around BRL 8 billion more, but there would be a drop in sales, then this number could be lower.”

Rodolfo Margato, an economist at XP Investimentos, claims that there was a political component to the decision. “The government did not want to risk its image with the middle class, which buys a lot on these platforms.”

For the XP economist, the retreat will provoke the continuation of discussions about unfair competition in retail. “The macro scenario does not change, but it is one more obstacle for local retailers”, says Margato.