Hello Global Investors,
After the first edition of the roundup and some good feedback, here's the second edition of the roundup. This week was riddled with a lot of news about inflation, some important Earnings Releases and an important political decision in Brazil. Hope you enjoy and don’t forget to subscribe:
Now let’s go
Economy’s Minister of Brazil Cuts Predictions
The Ministry of Economy from Brazil slashed 2021 GDP growth from 5.1% to 2.2%. Some researchers and analysts said this is an optimistic cut, since a recession in GDP is well possible.
The news came with another bad look for Bolsonaro’s government as the inflation predictions for the year were ramped up to 10%. That number was something unimaginable in the start of the year, as some of the Economy’s main names were talking about transitory inflation for some months, which now seems like a more serious problem.
All of that, of course, doesn't help Brazil’s currency. The Real is already the worst performing one excluding the Turkish Lira (which is an independent case related to their monetary policy). Even though Brazil has huge dollar reserves, and has been selling them, the pressure by the Brazilian Central Bank on the dollar price has not been working with the ongoing awful news from macro.
PSDB Previews Draws All Eyes
One of Brazil’s biggest parties had a nervous week with the preview election to decide who will be the candidate in next week’s election. João Doria (São Paulo’s Governor) and Eduardo Leite (Rio Grande do Sul Governor) are running for the spot. This is pivotal because every party in Brazil is looking to be the third option to Bolsonaro or Lula next year. Doria’s rejection is higher but he’s also more known than Leite, a young candidate for presidency.
The elections were paused today, after a problem with the app used for voting was detected. We should have results until the end of the week, so keeping an eye on this matter is important to anyone interested in Latam.
Alibaba and JD Report Their Earnings
The two e-commerce giants, Alibaba and JD reported their earnings this week. Alibaba released disappointing numbers pointing to macro as the main driver of slower growth. However, JD presented great results, going against Ali’s claims and signaling a possible share taken by the 2 best e-commerce companies in China.
The market responded accordingly. Baba shares fell as much as 10% on the day of the release and JD surged almost at 7%, and 4% more the day after, when it was announced the company will probabçy be included in the Hang Seng Index, after Evergrande lost its spot.
Interesting days for investors in China.
China’s President Defies the Cult to Individuality
Xi JinPing is now China’s president for an undetermined mandate. China’s Communist Party approved that the president will not be taken out of power in the next two years. This ruling comes with critics from certain parts of the party as it might reverberate in favor of the cult to individuality, giving Xi more importance than the own party.