RIO DE JANEIRO, BRAZIL – In February, Brazil exported more than it imported, and the trade balance registered a surplus of US$4 billion. It is the best result for February in five years.
Brazil has registered a positive balance of foreign investments since the beginning of the year, even after the beginning of the conflict in Eastern Europe.
The war scenario does not appear on the financial market charts in Brazil. The dollar falls, and the main stock market index rises without symptoms of stress.
When Russia invaded Ukraine on February 24, the American currency was worth R$5.11. Since then, it has fallen 1.76% to R$5.02. And the Ibovespa index, with the average of the most traded stocks, appreciated 3.37% in the eight days of conflict, emphasizing the shares of companies that export raw materials – commodities – such as Vale and Petrobras.
“Since the beginning of 2022, investors worldwide have been looking for alternatives for business opportunities, and the Brazilian stock market was very cheap. A second factor is that with the crisis in Ukraine, these tensions in Europe scare investors, who protect themselves, look for markets that are a little calmer. Investors compare big markets like the Brazilian market, the Russian market, the Turkish market, the South African market with emerging markets capable of attracting resources. When one of these markets has problems, it is natural that the others receive a larger proportion of investments,” explains Roberto Padovani, chief economist at Banco BV.
The risk classification agencies Fitch and Moody’s downgraded Russia’s rating. The country’s assets are now considered high-risk, which drives away investment funds. Money that escapes to countries considered safer, such as Brazil. Here it adds to a wave of incoming resources.
“As this war has weighed heavily on commodities, especially energy, such as oil and gas, and also on agricultural commodities, such as corn and wheat, this also impacts, in a certain way, positively on our market. There is a preference of foreign investors for this sector now,” says Jasson Vieira, chief economist of Infinity Asset Management.
In January, Brazil registered a balance of foreign investments in the country of R$32.491 billion. In February, it was more than R$30 billion.
Whenever there are expectations of a possible agreement between Russia and Ukraine, the leading world stock exchanges react well. Because, except for short-term movements, no economy profits from the war, according to analysts. They say that the eight days of conflict have already left a legacy of inflation and impacted global growth. And that the sooner peace comes, the better for business as well.
“The negative effects on the global economy, from the rising prices, the war, the uncertainty and especially the sanctions that have been put on Russia, which are very strong, never seen before, will knock growth down several ways starting with the price of oil. Global growth will be lower, the difficulties with supply chains have grown. You have ships that will not be docking in Russian ports. Deliveries will be delayed. And this is not good for economic growth. This is already a given”, says economist José Roberto Mendonça de Barros, from MB Associados.