Brazil’s Construction Companies: Exciting Turnaround in 2019; Good Prospects for 2020
RIO DE JANEIRO, BRAZIL – In 2015, faced with the recession, fiscal adjustment and the effects of Operation Lava Jato, the crisis in construction companies seemed to be endless. There were approximately 600,000 layoffs and a 98 percent drop in profits for companies in the sector.
In this scenario, the construction companies’ shares fell between 18 percent (Trisul’s drop) and 65 percent (Helbor’s drop) between early 2015 and February 2016, a period that marked the peak of the Brazilian political and economic crisis.
The exceptions were MRV, which rose 20 percent at the time, and Gafisa, which increased five percent.
However, things changed in 2019.
The Real Estate Index (IMOB) soars 67 percent this year, while MRV (MRVE3)’s shares rise 84 percent, Cyrela (CYRE3) jumps 107 percent and Even (EVEN3) is up 15 percent.
Tecnisa (TCSA3) records gains of 27 percent, Tenda (TEND3) rises 86 percent, Direcional (DIRR3) rises 112 percent, Eztec (EZTC3) sees 101 percent gains, Helbor (HBOR3) has an impressive 196 percent rise and Trisul (TRIS3) an even more significant increase of 276 percent.
Conversely, Gafisa (GFSA3) dropped 49 percent since the start of the year.
Marcello Milman, analyst at AZ Quest, explains the trend, pointing out that the market anticipates what investors believe will happen in the economy and the macro outlook currently shows far fewer clouds than it did four years ago.
“Things are improving for Brazil and even more for the medium and high-income segments in São Paulo,” he says.
Renan Manda, a real estate fund analyst at XP Investimentos, understands that despite the recent sharp appreciation, companies in the construction sector still have the potential to continue performing well in the short term on the stock market.
There are four factors behind this theory: the economic activity rebound combined with the drop in unemployment rates, which increases the financial stability of families; the cut in the basic SELIC rate, which has led several banks to reduce interest rates on real estate financing; the stabilization of supply with the reduction in the volume of offers in recent years; and the approval of the new law of mortgage cancellations in the districts, which should minimize the impact of this problem in the future.
Source: Infomoney
Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
-0.10%
166,934.20
-0.10%
64,397.45
-0.66%
11,042.67
+0.39%
2,947,349
-1.77%
2,452.46
+0.84%
58,104.31
+0.40%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 166,934.20 | -0.10% | +21.85% | 167,100.95 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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