BRASILIA: According to the Confederacao Nacional da Industria, business confidence in Brazil dropped by 0.7 points to 35 in October from 35.7 in September 2015. With declining business sentiment, the Brazil-focused iShares MSCI Brazil Capped (EWZ) and the Direxion Daily Brazil Bull 3X ETF (BRZU) fell 43.5% and 87.1%, respectively, from a year ago as of October 19.
Brazil is one of the worst-performing economies in emerging markets (EEM). Stocks such as Itaú Unibanco Holding (ITUB), Petrobras (PBR), and Banco Santander (BSBR) are down 48.7%, 62.2%, and 41.6%, respectively, over the past year as of October 19.
It is not a good sign for the Brazilian economy that the business confidence index has been below the neutral level for a long time. Brazil is already struggling with high inflation and a depreciating currency.
Falling industrial commodity prices due to oversupply and lack of demand are dragging the metals and mining stocks down. Stocks such as Companhia Siderúrgica Nacional (SID), Vale (VALE), and Gerdau (GGB) are down 61.3%, 57.2%, and 64.7%, respectively, over the past year as of October 19.
Construction activity contracts in October
Companies are losing confidence in the economy due to the huge contraction in the construction industry and medium businesses. The index of current conditions has fallen to 26.5 points in October from 27.5 in September 2015. The index staying below 30 implies that business conditions are worsening.
Also, the expectation index for the next six months has fallen to 39.3 in October as against 39.9 in September 2015, which reveals that future expectations about economic growth remain sluggish. With negative industrial production and a high unemployment rate, Brazil is facing a severe contraction in economic growth.
Mercedes-Benz sees Brazil truck sales up 18% in 2020
SAO BERNARDO DO CAMPO, Brazil: The Brazilian unit of German automaker Mercedes-Benz (DAIGn.DE) expects overall domestic truck sales to rise...
