Market roundup: Brazil’s state-owned firms, buy or pass?

Hello and welcome back to our market roundup, when we sum up the most important goings-on in Brazilian markets.

🔔 The dashboard: The Ibovespa benchmark stock index was up by 2.8 percent this week. The Brazilian Real, meanwhile, gained 2.73 percent against the U.S. Dollar.

• Biggest gains: Cosan (biofuels), +16.1 percent.
• Biggest drops: CVC (tourism), -8.9 percent.

The risk of investing in state-controlled firms in electoral years

It has been a quintessential rollercoaster year for the Brazilian stock market. The Ibovespa benchmark stock index started 2022 as one of the biggest winners, up nearly 17 percent in April. Soon after, the ground it had gained was wiped out, but the index is now up 7 percent once more.

This level of volatility is mainly due to the fact that some of the companies that weigh the most on the Ibovespa are state-controlled. A stagnant economy, high inflation, rising interest rates, and a polarized presidential election on the horizon have created a scenario of deep uncertainty.

And to make matters worse, Brazil’s government seems to be scrambling for its political survival without much idea of...