Ibovespa: What Is Causing the Accumulated Drop of 11.31% in 2021?

Written by Daiane Souza

Published on 02/11/2021 at 10:13

Be the first to react!

On the last Monday (01), the Ibovespa closed up 1.98%, easing part of the accumulated decline over the past months, which reaches 11.31%. Over the last 52 weeks, with the history from November 2020 to 2021, there is still a slight appreciation of 12.3%. The reason for the new appreciation this week is due to the increase in the basic interest rate, the Selic, which went up to 7.7% per year after the meeting held by COPOM.

Thus, investors are once again seeing a positive scenario for monetary investments in Brazil: the rise in interest rates may finally reduce the IPCA indices that are accumulated at 10.2% and, therefore, lead to a slight depreciation of the dollar against the real.

Currently, the U.S. dollar is trading up 0.43% at R$ 5.67, which may impact a new wave of increases in fuels such as gasoline and diesel. At the G20 summit, the President of the Republic, Jair Bolsonaro, discusses this possibility and argues that an adjustment should be made by the Brazilian state-owned company, Petrobras. The accumulated increases in 2021 have already surpassed 50%.

ARTICLE CONTINUES BELOW

Rising Inflation Causes Ibovespa Crash

There are several reasons that can trigger the increase in Brazilian inflation. Economists argue that emergency aid has some blame: the more money is in circulation, the higher the prices of products and services.

Another cause, which may have led to the significant increase in the Broad Consumer Price Index (IPCA) accumulated at 10.2%, is the rise of the dollar, which caused many farmers to sell their products abroad instead of Brazil.

As a result, stocks have decreased in the country, triggering the law of supply and demand: the less there is and the higher the demand, the price tends to rise so that only those with more means can buy. This is why, in some Brazilian regions, rice has cost more than R$ 40 for a 5 kg bag.

A similar situation occurred in Brazil during the 1930s when Getúlio Vargas ordered that sacks of coffee be burned or discarded: there was too much production for a demand that was not as high. Consequently, prices began to fall due to excess inventory, which harmed the economy. It was necessary to think of ways to ensure a reduction in the high inventory to align with the demand and have a readjustment of values.

The rise in inflation indicates economic instability. Therefore, it tends to cause a significant decrease in the number of transactions taking place within the Brazilian Stock Exchange.

Selic Rate Enters as a Hope for Ibovespa

The rise in the Selic rate comes as a hope to stabilize the Ibovespa, just as the privatization of some state-owned companies such as Petrobras, currently led by Luna and Silva. After the President of the Republic, Jair Bolsonaro, discussed the possibility of privatization, the stock market rose by over 2%. João Dória, governor of the state of São Paulo, also shares the same objectives.

For the year 2021, it is estimated that the Selic rate will end at 8.5%. However, for the year 2022, interest rates will continue to rise until reaching 10% before potentially showing variations and decreases thereafter.

Min — Max (Day)	103513 – 106135
Variation (Day)	+1.98%
Variation (Month)	+1.98%
Variation (2021)	-11.31%
Variation (52 weeks)	+12.34%

Ibovespa: What Is Causing the Accumulated Drop of 11.31% in 2021?

Rising Inflation Causes Ibovespa Crash

Selic Rate Enters as a Hope for Ibovespa

A village with 115 inhabitants wants new residents: it offers a house, a job, up to 44 thousand euros in benefits, almost free rent, an annual grant of 8 thousand euros for 3 years, and a 20 thousand euro incentive for businesses in the mountains of Italy.

NASA is offering US$ 750,000 to people from anywhere in the world who solve a problem that could decide survival on Mars: creating food for astronauts without relying on resupply from Earth.

New microwave that can replace three appliances hits the market: Sharp launches 3-in-1 model that combines air fryer, convection oven, and heating in 0.9 cubic feet for small kitchens

With an 88-meter wingspan, a capacity of 250 tons, six engines, and 32 wheels, the Ukrainian giant became the greatest symbol of extreme air transport and one of the most impressive machines in aviation history.

The United Kingdom removed approximately 1.8 million cubic meters of sand from the seabed and is depositing it all on 6 kilometers of beaches in Norfolk, in a mega-operation to curb erosion, protect coastal villages, and shield a vital gas terminal against the encroaching Atlantic.

After 16 years and almost 600 prototypes, a Chinese inventor unveils the world’s smallest and cheapest manned jet, at just 3.80 meters long and costing US$7.2 thousand in materials.

Magalu has a clearance sale on JBL Boombox 4 with 210W of power, 34-hour battery, and 3-way system.

The Government has already released the new RG for 52 million Brazilians with a single CPF, integrated biometrics, a digital version on Gov.br, and national validity.

In Cuba, where blackouts last for hours and charging an electric tricycle takes 10 hours with no guarantee of power, an entrepreneur inaugurated the country’s first free solar charging station; residents are already coming from 70 kilometers away just to get power.

Tons of algae invade China’s coast every summer, destroying marine ecosystems, but Chinese laboratories have transformed the problem into biological fertilizer sold in over 60 countries, with 50 registered patents for harvesting, drying, and processing the material directly from the ocean.

Goodbye allergy and fine dust: Xiaomi launches purifier that removes 99.99% of particles in one hour, eliminates formaldehyde in two hours, reduces 98.9% of pollen, and delivers 11,666 liters of clean air per minute

Seven world powers including the US, China, and Russia are spending €22 billion on a reactor in the south of France that aims to confine plasma at 150 million degrees Celsius, ten times the temperature of the Sun’s core, using a magnetic field capable of lifting an entire aircraft carrier.

Ibovespa: What Is Causing the Accumulated Drop of 11.31% in 2021?

Rising Inflation Causes Ibovespa Crash

Selic Rate Enters as a Hope for Ibovespa

A village with 115 inhabitants wants new residents: it offers a house, a job, up to 44 thousand euros in benefits, almost free rent, an annual grant of 8 thousand euros for 3 years, and a 20 thousand euro incentive for businesses in the mountains of Italy.

NASA is offering US$ 750,000 to people from anywhere in the world who solve a problem that could decide survival on Mars: creating food for astronauts without relying on resupply from Earth.

New microwave that can replace three appliances hits the market: Sharp launches 3-in-1 model that combines air fryer, convection oven, and heating in 0.9 cubic feet for small kitchens

With an 88-meter wingspan, a capacity of 250 tons, six engines, and 32 wheels, the Ukrainian giant became the greatest symbol of extreme air transport and one of the most impressive machines in aviation history.

The United Kingdom removed approximately 1.8 million cubic meters of sand from the seabed and is depositing it all on 6 kilometers of beaches in Norfolk, in a mega-operation to curb erosion, protect coastal villages, and shield a vital gas terminal against the encroaching Atlantic.

After 16 years and almost 600 prototypes, a Chinese inventor unveils the world’s smallest and cheapest manned jet, at just 3.80 meters long and costing US$7.2 thousand in materials.

Magalu has a clearance sale on JBL Boombox 4 with 210W of power, 34-hour battery, and 3-way system.

The country records its first surplus in six months and hits an all-time export record, with oil and gold sharply rising, while the Middle East crisis triggers inflation in the United States and redraws the map of global energy trade.

Coinbase announces mass layoff of 700 employees, cuts 14% of staff amid AI wave and leads the crypto giant with operations in Brazil to a billion-dollar restructuring.

New import rule raises the quota to 50% in Dionísio Cerqueira, draws more trucks to the border with Argentina, and could unlock R$ 650 million in the Far West of SC

Electronic waste turns into gold for a Brazilian company: with a 100,000 m² factory and an investment exceeding R$ 100 million, the company recycles up to 300 tons per day and transforms scrap into a billion-dollar business expanding in Latin America.

The Government has already released the new RG for 52 million Brazilians with a single CPF, integrated biometrics, a digital version on Gov.br, and national validity.

In Cuba, where blackouts last for hours and charging an electric tricycle takes 10 hours with no guarantee of power, an entrepreneur inaugurated the country’s first free solar charging station; residents are already coming from 70 kilometers away just to get power.

Tons of algae invade China’s coast every summer, destroying marine ecosystems, but Chinese laboratories have transformed the problem into biological fertilizer sold in over 60 countries, with 50 registered patents for harvesting, drying, and processing the material directly from the ocean.

Goodbye allergy and fine dust: Xiaomi launches purifier that removes 99.99% of particles in one hour, eliminates formaldehyde in two hours, reduces 98.9% of pollen, and delivers 11,666 liters of clean air per minute

Seven world powers including the US, China, and Russia are spending €22 billion on a reactor in the south of France that aims to confine plasma at 150 million degrees Celsius, ten times the temperature of the Sun’s core, using a magnetic field capable of lifting an entire aircraft carrier.