Stock falls and dollar hikes as banker and senator go to jail
The arrests of BTG Pactual CEO André Esteves and the government's leader in Senate Delcídio do Amaral (of the Workers' Party, PT) reverberated Wednesday (Nov. 25) in the financial market with a fall in the stock exchange and a rise of the US currency. The Ibovespa stock exchange index was down 3%. Shares at Petrobras reported a plunge of over 7%.
The shares of BTG Pactual (BBTG11) dropped 21%. The fall also had an impact on the shares of major banks listed on the stock exchange, such as Bradesco, Itaú, Banco do Brasil, and Santander.
The dollar was seen on the rise throughout the day and reached R$3.80 at its highest. “The dollar had been showing a downward trend on the last few days as a number of foreign companies bought Brazilian companies. All that was like a cold shower coming down,” said Alexandre Espírito Santo, Macroeconomics Professor at Ibmec-RJ and economist at Órama Distribuidora de Títulos e Valores Mobiliários.
In Espírito Santo's view, Esteves's arrest is reverberating in the market because the incident was “something utterly unexpected.” “He's influential, the biggest shareholder at one of Brazil's main investment banks, with major international penetration. BTG is very active in share floating operations, so this is very new to the market,” he stressed.
In the view of economist Zeina Latif, from XP Investimentos, the arrest of the senator generates apprehension towards the upcoming developments of Operation Car Wash. “It's uncertainty for the market. Our environment was turbulent as it was and now there's this major trigger,” she said. Zeina also maintained that the arrests affect Brazil's image before foreign investors, who may take a more careful approach.
Latif added that the senator is “regarded as a skillful and moderate negotiator.” “He was capable of speaking to all the groups in Congress. How does the economic agenda fare in this crisis?”
The Central Bank (BC) announced today (25) that it is monitoring the impact of the arrests in the financial market. “Fulfilling its institutional mission of ensuring solidity in the financial system, the Central Bank is currently monitoring the impact of the incidents for the regulated institution. The institution presents robust indicators of financial solidity and remains normal and functional in the market,” BC said through its press office, referring to BTG Pactual.
The BC added that it is requesting data from the competent authorities in an attempt to check whether there is any development within reach of its administrative work. “The Central Bank, as is customary, will not comment on specific cases under analysis before facts have been ascertained and the administrative decision has been made.”
BTG Pactual Bank
BTG Pactual is an investment bank formed and controlled by a partnership with 156 executives. In May, 2009, the BTG Investment repurchased UBS Pactual for $2.5 billion and the transaction was performed and approved by the Central Bank in October that year. The banker holds a fortune estimated at $2.38 billion and ranks 13th among the richest men in Brazil according to Forbes magazine.
In 2014, André Esteves received the Personality of the Year award by the UK Chamber of Commerce. He was also considered one of the 50 most influential people in the world by news agency Bloomsberg.
In a note, BTG Pactual explains that it is willing to provide authorities with any clarifications required and will cooperate with investigations.
Translated by Fabrício Ferreira / Amarílis Anchieta
Fonte: Stock falls and dollar hikes as banker and senator go to jail
