Evergrande, IPCA-15, Bluefit IPO and what will affect today’s Brazilian financial market

RIO DE JANEIRO, BRAZIL – The leading international stock exchanges operate in a fall this morning, Friday, 24, with the return of fears about the over-indebtedness of Chinese Evergrande, after the company failed to honor part of its debts, which were supposed to be paid the day before.

Reflecting pessimism about Evergrande’s ability to emerge from the crisis, Evergrande shares plunged another 11 percent in Hong Kong as worries about the consequences of the bankruptcy of one of China’s most prominent developers spread around the world.

In the United States, the S&P 500 index falls 0.3% on the futures market, while in Europe, the Stoxx 600 retreats 0.6%.

CENTRAL BANKERS

Despite the fears, European Central Bank (ECB) President Christine Lagarde sees the European economy’s exposure to Evergrande as only “limited.”

“What we are seeing is a China-centric impact and exposure. I cannot speak for the United States [but] I can say for Europe that its direct exposure is limited,” the central banker said in an interview with CNBC.

At 11 a.m., it will be Federal Reserve (Fed) Chairman Jerome Powell’s turn to deliver his speech, live on the outlook for economic recovery. A few days before the monetary decision, the market does not expect great news in his remarks, although signs of stimulus withdrawal are on investors’ radar.

INFLATION

In Brazil, the attention of investors should turn to inflation data, with the release of the Broad Consumer Price Index for the first fortnight of the month, scheduled for this morning.

The expectation is that the IPCA-15 will be 1.03%, hitting 9.94% accumulated over 12 months. Although the Central Bank has already signaled that it will not change its plans with each new inflation figure, higher than expected numbers may lead the market to project an even more challenging hike in the December meeting, for which projections vary between a further adjustment of 75 and 125 basis points.

BLUEFIT

The initial public offering (IPO) of fitness center chain Bluefit (BFFT3) is expected to be priced this Friday. With an indicative range between 12.25 and 15.25 reais, the company can move R$450 (US$85) million. The stock is expected to debut on Tuesday 28th.

After discounting the IPO fees, the entire amount raised will go to Bluefit’s cash flow. Of this amount, 55% should be destined to opening new units, while the rest should go to the acquisition of new franchises and equity stakes.

The offering came about two months after its competitor SmartFit (SMFT3) went public. Since its debut, Smatfit has accumulated a 15% rise against a 10% fall in the Ibovespa over the same period.

VAMOS

The machine and truck rental company Vamos (VAMO3) priced its subsequent follow-on offer at 16.75 reais per share, raising 1.1 billion reais. The offer price was slightly higher than the closing price of the last trading session, of 16.20 reais. The money raised should be used to buy trucks and machinery.