Today, we look at the GameStop short squeeze which has grabbed headlines around the world — and why it cannot be repeated in Brazil. With companies dropping foreign suppliers, local equipment manufacturers enjoy a boost. Is the vice president plotting against Bolsonaro?
Why the GameStop debacle is hard to replicate in Brazil
The biggest story in global financial markets this week is the absurd tale of how a group of Reddit users banded together to entrap big-money hedge funds into massive losses.
Recap. Members of the /WallStreetBets subreddit came up with the idea of artificially pushing up the value of shares of struggling video-game retailer GameStop, thus hammering major hedge funds that had shorted the stock. One of them, Melvin Capital, received a USD 2.75-billion bailout from two investors after the sudden surge in trading drove GameStop value up by over USD 10 billion on Wednesday alone.
Why it matters. Inspired by the stunt, netizens from all over the world tried to replicate it in their home countries. In Brazil, their target was IRB Brasil, Latin America’s biggest reinsurance group, which has struggled mightily over the past year, to the point of drawing comparisons to Enron. A Telegram channel...