South America united, but only in words. Sui financial markets the main squares continue to proceed in random order also in the month of May, which was also marked - from a political point of view - by the meeting of all the national leaders, invited to Brasilia by President Lula. For the first time since 2019, when he was banned by Bolsonaro, the Venezuelan dictator was also granted entry to Brazil Nicolas Maduro: his participation was claimed by Lula with an ease bordering on an own goal, given that it did not go down well with the president of Uruguay, Luis Alberto Lacalle Pou, center-right, nor socialist Gabriel boric, president of Chile. Both have officially distanced themselves.
The ambitious attempt to seat everyone at the same table leader of Latin America it has also collided with the great differences that still persist between the various economies, as Bloomberg pointed out in the article entitled “Lula's Dreams of Latin American Unity Ignore Brazil's Economic Reality”. The newspaper argues, not wrongly, that before dreaming of a united political platform, Lula and the other presidents should rather work on theeconomic integration of Mercosur, which is still far from being fulfilled at a level comparable to that seen for example in Europe. From the point of view of Bags, the month of May that has just ended has in fact once again given conflicting indications.
Brazil: Bovespa gains 7% in May despite distrust in Lula
The markets are betting on an imminent reduction in interest rates and this has triggered a bullish trend in May, in which the Bovespa index of Sao Paulo Stock Exchange gained about 7%, compared to a downward first part of the year, given the general distrust of the financial community towards the re-elected president Lula (according to a survey by CNN Brasil, 80% of the insiders). The return of the former president of the economic miracle of the 2000s was initially encouraged by the financial world, which however did not like some interference from the new government, for example towards the giant Petrobras, which in a few months first saw the fiscal advantages envisaged by Bolsonaro disappear and then was invited – as the State is the first shareholder of the oil company – to renounce the generous dividend policy (the Board of Directors will decide in July) and to reduce the cost of fuel .
Right on Petrobras Lula had instead to turn a blind eye to the plan for extract crude from the mouth of the Amazon, going against the more environmentalist part of the executive (starting with the Minister for the Environment Marina Silva) and part of the electorate. The markets, on the other hand, did not mind the green light - still not definitive - for a new large extraction project, although not exactly in line with the paradigms of green finance. The solution could be to grant the license for a limited period, and in the meantime Petrobras is already looking around, making announcements investments in Bolivia, Guyana e Venezuela. The new strategies and perspectives are currently convincing investors: Petrobras gained about 15% in May. The banks also did well during this period: Bank of Brazil +8% around, even better Bradesco +15%, while Itau closes the month around +6%.
Argentina's stock market rally continues despite record inflation
Instead, the golden 2023 of the Buenos Aires Stock Exchange, increasingly disconnected from a real economy which is instead falling apart, between the historical record of inflation recorded in March (over 100% on an annual basis) and the climate crisis which is bringing plantations to their knees, above all of soybeans, which until a few years ago Argentina was the first exporter in the world, to then be overtaken by Brazil also due to a abnormal drought started in 2020 and still ongoing. Sometimes, however, these are precisely the mechanisms that trigger a rise in the stock market: the collapse in the production of soybeans (and other agricultural raw materials) will cause prices to rise, to the advantage of individual companies.
The rally of the index merval, moreover, continues in the wake of 2022, during which it had risen by 30,8%, also in that case thanks to the increase in the prices of energy and agricultural raw materials on the international market. In May, compared to the end of April, the index of the Buenos Aires Stock Exchange gained a further 16%, driven once again by energy. To give some examples, Pampa Energy it has nearly doubled in value since the beginning of the year, and the same can be said for Shipping company de Northern gas e Southern Gas Transporter.
Mexico, stock market down sharply in May and maneuvers on Banamex
The bad instead Mexico City Stock Exchange, which in May lost about 10%, mainly due to the collapse of May 11, on the eve of the end of the automatic deportation regime for migrants crossing the border with the United States, according to the law wanted by then President Donald Trump in 2020. Since May 12, the old regime has returned, according to which at least the asylum request is evaluated. In 2022 alone, despite the ban, 2,6 million people were arrested trying to cross the border, an all-time record. And from 2020 to today, there have been 2,8 million expulsions of citizens who have already entered.
The other news from Mexico, this time of a strictly financial nature, is the president's latest invention Andrés Manuel López Obrador, who announced that he is considering letting the state acquire half of the Mexican branch of Citigroup, known as Banamex, after the US banking giant had made it clear that it wanted to sell it. As reported by Reuters, the government is therefore thinking of acquiring 50% of the capital, with an investment of 3 billion dollars. The operation, according to the president, would take place through a public-private consortium, with the participation of Mexican private investors. Nothing to report instead from Bags of Chile e Colombia, substantially stable between April and May.
