Why the Brazilian stock market might root against their own team

Why the Brazilian stock market might root against their own team

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Brazil has the most devoted national following in the world. But many think the Brazilian stock market is rooting for a loss. Here's why.

So you may have heard about the whole "Brazilians like soccer" thing. It's the country's national sport, far surpassing any other in popularity. And Brazil's national team has won the most championships of any in the world. 

They have never not qualified for the World Cup. 

And when they do compete in the World Cup, it's a big deal. Work actually stops when the team plays. All the country's banks let workers off 3 hours before each game. It is a powerful cultural and national symbol.

So it's pretty weird that there are some Brazilians who aren't exactly hoping for a win. The assumption of many in Brazil's financial world is that a poor team performance would be bad for President Dilma Rousseff, increasing the odds of ushering in a more business-friendly government. 

Brazil's economy has performed poorly since Rousseff took over, although it's not entirely her fault. The global economy slowed down, in turn slowing down demand for Brazilian commodities.

Still, for Brazilians to even ponder the benefits of a poor showing while hosting the World Cup is a sign of just how unpopular Rousseff's government is, as prices have skyrocketed and growth has been the slowest since 1992

While it might seemed far-fetched that a country would hinge its political future on the results of soccer matches, this sort of thing has precedent. In 1970 Britain's Labour party had a solid 7% lead in national polls when Prime Minister Harold Wilson called an election. 

That year the Conservatives snapped up 60 new seats. Not a lot can change in the weeks between when a Prime Minister calls an election and when it actually happens. One thing that did go down, however, was a shocking 3-2 loss by the heavily touted British national team to a ragged West German team. 

Four days later Britain had a new government. 

So it's hard to say how this precedent will apply to Brazil's World Cup in 2014. Nations are bigger and less cohesive now than they were in the 70s. But with investors talking about the merits of a Brazilian loss, one has to wonder how the team's performance will affect the country's struggling economy. 

And if a loss can turn out to be a win in the long run. We built a list of rallying Brazilian stocks by looking for companies trading above their 20-day, 50-day, and 200-day simple moving averages (SMA). Will they share the fortune of their favorite team? 

Click on the interactive chart to view data over time. 

Will these rallying Brazilian stocks move on Brazil's win-loss record? Use the list below to begin your analysis.  
 

1. Petroleo Brasileiro (PBR, Earnings, Analysts, Financials): Engages in oil and natural gas exploration and production, refining, trade, and transportation businesses. Market cap at $97.51B, most recent closing price at $14.98.

SMA 20: 1.98%

SMA 50: 14.08%

SMA 200: 21.85%

 

2. Brasilagro Companhia Brasileira de Propriedades Agr (LND, Earnings, Analysts, Financials): Is engaged in agriculture, cattle raising, and forestry activities in Brazil. Market cap at $266.09M, most recent closing price at $4.57.

SMA 20: 7.15%

SMA 50: 14.93%

SMA 200: 13.24%

 

3. Companhia Paranaense de Energia (ELP, Earnings, Analysts, Financials): Engages in the generation, transmission, distribution, and sale of electricity for industrial, residential, commercial, and rural customers primarily in the State of Parana, Brazil. Market cap at $4.15B, most recent closing price at $15.07.

SMA 20: .97%

SMA 50: 12.24%

SMA 200: 21.16%

 

4. Cia Energetica de Minas Gerais (CIG, Earnings, Analysts, Financials): Engages in the generation, transformation, transmission, distribution, and sale of electric energy primarily in Minas Gerais, Brazil. Market cap at $9.36B, most recent closing price at $7.46.

SMA 20: 2.91%

SMA 50: 11.84%

SMA 200: 24%

(List compiled by James Dennin. Monthly returns sourced from Zacks Investment Research, all other data sourced from Finviz.)

 

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One Response to “Why the Brazilian stock market might root against their own team”

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