RIO DE JANEIRO, BRAZIL – Political and fiscal uncertainties are beginning to undermine the sentiment in the financial community shown on social media. That’s according to a survey on the Fintwit community, which collects profiles on Twitter of analysts, managers, economists, and investors who follow the markets.
The measurement, conducted with a tool developed by digital marketing technology specialist Fernão Guerra, uses an algorithm that tracks and semantically analyzes the terms used in the 30 most influential accounts in the Fintwit community. Based on these filters, the program assigns a score between -1 and 0 for negative sentiment and between 0 and 1 for positive tendencies. The score is derived from the average of the readings of the individual profiles.
In a daily series between the beginning of May and August 10, without taking into account weekends, one can notice a significant decrease in the moments of positive mood on Fintwit. For example, in the last weeks, between the beginning of July and August 10, the frequency of negative and positive signals is the same, with 15 events each.
The beginning of the more pessimistic phase coincides with the presentation of the second phase of the tax reform project, which includes the end of the interest on equity (JCP) payments and the taxation of dividends.
The proposal was introduced in the Chamber of Deputies on June 25, a Friday. Starting the following Monday, Fintwit began to develop a negative sentiment that lasted throughout the week.
During the same period, another factor began to influence market participants’ perceptions: the possibility of a new outbreak of the Covid 19 pandemic due to the spread of the Delta variant. In July, Covid’s CPI also deepened its investigation into possible subterfuge by government officials in investigating alleged overbilling of the Indian vaccine Covaxin.
The Office of the Prosecutor General (PGR) requested and, on July 2, Federal Supreme Court (STF) Justice Rosa Weber approved the opening of an investigation to examine the conduct of President Jair Bolsonaro in the Covaxin negotiation case.
The month of July was also marked by protests against the government. Demonstrations against the executive branch took place on May 3 and May 24.
The reporting period was marked by the return of uncertainties regarding the Brazilian tax scenario. The government’s commitment to pay R$90 billion by 2022 was at the forefront in the first days of the month. There were also several negative days in early August.
The suggestion of the possibility of new fiscal challenges began to weigh on the markets, as did the climate of confrontation between the Brazilian Judiciary and President Jair Bolsonaro.
The survey showed that before the second half of the year, the mood was mostly positive in May and June. In between, there were only 12 days of negative sentiment. On the other hand, there were 28 positive days.
The most negative moment of the period, with a -0.24 drop in average Fintwit sentiment, occurred on May 13. On that day, the markets were surprised by the higher than expected inflation rate in the United States. The Consumer Price Index (CPI) rose to 4.2% in April, while analysts’ consensus had expected inflation to be 3.6%.
Concerns about a possible change in monetary policy by the U.S. Federal Reserve (Fed) caused the Ibovespa stock index to end the day down almost 3% and the dollar to rise to R$5.30. However, the surprise subsided in the following days, when the market began to better process the data and signals from the US monetary authority.
The figures for the first quarter of 2021 balance sheets also helped maintain the positive sentiment in the following weeks. Valor reported on May 19 that the rise in commodity prices and the recovery of the major economies gave a strong boost to the results of Brazilian companies in the first three months of the year.
According to the creator of the Fintwit Sentiment tool, the survey is “more of a study, an experiment, than statistical data.” According to Guerra, the index does not allow us to conclude the causality of the fluctuations, “but it can be interesting because we can see the mood of the market, which seems to change depending on the news,” he explains.
Guerra, who works at Google as a Solutions Leader in the Technologies for Marketing (martech) division, developed the tool as part of his personal interest in the investment space. His portfolio, he says, is 100% stocks.