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Shares of Brazil’s state-controlled oil producer Petrobras erased their gains for the year as fears of increased political intervention with Luiz Inacio Lula da Silva as president are driving investors to dump the stock.
Petroleo Brasileiro SA’s shares closed down 5.5% to 28.30 reais in Sao Paulo, and have shed over $20 billion in market value since their October peak. Lula, who defeated incumbent President Jair Bolsonaro at the presidential runoff, is expected to halt a push to privatise Petrobras that gained traction since Bolsonaro, a former army captain, took over in 2019.
Legacy Capital, a Sao Paulo-based hedge fund manager that oversees over 20 billion reais ($4 billion) in assets, said it trimmed long bets in the nation’s state-controlled companies following the vote. The fund wrote in a note to investors this week that a Lula administration will likely bring more public spending, higher taxes, more credit via public banks and a halt in privatisations.
—Bloomberg