Income tax reform, Vittia’s debut, GOL, Kora: factors affecting today’s Brazilian financial market

RIO DE JANEIRO, BRAZIL – On Thursday, September 2, the Brazilian market should reflect the new 20% tax on dividends and the end of interest on equity (JCP) payments, measures included in the income tax reform approved yesterday by the Chamber of Deputies. The change is expected to affect virtually all listed companies.

Although similar legislation had been anticipated since the tax reform bill was first proposed, the passage will likely result in more dividend tax pricing. It remains to be seen whether the issue will intersect with the international scenario, which argues for another positive day on the New York Stock Exchange.

U.S. futures indexes are up about 0.2% this morning, in line with the European Stoxx 600, as investors await data on jobless claims in the United States. This is the last release from the U.S. labor market before the payrolls release, the report on non-farm employment, which is considered one of the most important economic indicators in the world.

The previous day, the ADP data, known as the Payroll Advance, came in much worse than expected, leading to a positive reaction in the market as pressure increased on the Federal Reserve to maintain stimulus through asset purchases for longer. Tomorrow’s payrolls are widely expected to add 750,000 jobs.

Meanwhile, the international market is digesting the Eurozone’s Producer Price Index (IPP), which once again beat estimates and heightened inflation fears in Europe. August IPP hit a monthly high of 2.3% versus the expected 1.1%, while annual IPP rose to 12.1% from 10.2%.

Also, on Thursday, Brazilian industrial production for July will be released. A monthly decline of 0.5% and a yearly high of 1.8% are expected. The release is scheduled for 9 AM.

VITTIA

Shares of fertilizer maker Vittia (VITT3) are expected to debut on the B3 stock exchange on Thursday after trading at R$8.60, the low end of the indicative range. The IPO, conducted with limited funds, raised R$359 million, of which about 15% was paid in cash. The company intends to use this money to make strategic acquisitions.

GOL ABSORBS SMILES

Smiles announced last night that it had approved the company’s incorporation by its parent company and sole shareholder GOL (GOLL4). With the restructuring of the company, Smiles will become extinct.

Kora

Kora Saúde (KRSA3) signed an agreement to purchase up to 75% of Angiocardis, a company specializing in interventional cardiology procedures. The acquisition was made through the subsidiary Ilha do Boi and cost R$7.1 million.

ONCOCLINICAS

Also in the healthcare sector, Oncoclínicas (ONCO3) completed the full acquisition of Centro Brasileiro de Radioterapia Oncologia e Mastologia, CEBROM. The amount earmarked for the transaction is R$190.5 million, with synergies estimated at R$25 million by 2022.

“This acquisition represents an important step for Oncoclínicas Group in its strategy to consolidate the clinical oncology market in the Midwest region of Brazil,” according to a company statement.

For the full picture, see our Brazil Tax Reform: Complete Guide.