Brazil expects 2 point 4 percent growth 2020 and will be key for Paraguay - The Brazilian government believes that the economy of the South American giant will advance in 2020 and projected that the gross domestic product (GDP) for this year will rise from 2.32% expected to 2.4%, the Ministry of Economy reported yesterday.

The expected expansion in Brazil is "auspicious" for Paraguay, which achieved "protection" from the recession in Argentina, which "ceased to be a significant contributor to local growth some time ago," said José Cantero, president of the Bank Central of Paraguay (BCP), in statements to the Bloomberg international media.

Meanwhile, inflation in Brazil, which was estimated at 3.53%, will also rise this year and will be 3.62%, according to forecasts disclosed by the Brazilian Economy portfolio.

Brazil expects 2 point 4 percent growth 2020

The estimates of the Government of the neighboring country are more optimistic than those of the financial market in Brazil, which expects an economic growth of 2.3% by 2020, according to the latest edition of the weekly newsletter Focus, made by a hundred economists consulted by the Central bank.

"The employment and activity indicators presented a consistent scenario for the resumption of the economy in 2020," says the report of the Ministry of the South American giant.

RECOVERY. Currently, Brazil is still recovering from the harsh crisis that the country went through in 2015 and 2016, when gross domestic product (GDP) sank by about 7%, which was its worst recession in recent decades.

In 2017, the economy grew 1.3%, the same percentage of 2018, while the expansion reached 1.2% in 2019 and now 2.4% is expected in 2020, according to forecasts by the Brazilian Government.

During his first year of government, right-wing president Jair Bolsonaro carried out an important fiscal adjustment and reform plan to rebalance the country's battered public accounts.

The Executive managed to approve a controversial retirement reform, slightly reduce expenses, inject liquidity through the release of labor guarantee funds and promote a broad privatization plan.

However, the industry still has high levels of idleness, unemployment was installed in double digits (11.2%) with a record informality rate.

Meanwhile, the real devalued about 4.5% against the dollar, which at the end of November 2019 marked its maximum when sold at 4,258 reais against the US currency and today the greenback is quoted at 4,137 reais.

Non-leading actions accumulate increases of almost 80% and

While the S&P Merval shows a decrease of 0.1% in pesos during the year, some actions of the general panel recorded in just nine days of 2020 a vertiginous shot of up to almost 80%.

While investors await signals about the restructuring of sovereign debt, and try to digest the decision of the Province of Buenos Aires to delay the payment of a bond, something that triggered a generalized profit taking in the market, some actions of the general panel BYMA seem not to notice that and accumulate in just nine days of 2020 a vertiginous shot of up to almost 80%.

Delayed in their quotations in relation to more liquid papers of the leading panel, and stimulated by the expectation of the revival of mass consumption or construction, actions such as PATA -Importadora and Exportadora de la Patagonia, controller of La Anónima supermarkets-, and 78.2% so far in January, while the roles of foodstuffs (and flour producer) Morixe climbed 73.3% in the same period.

At the same time, the important monthly advances of the TGLT construction company (39.1%), of the Agrometal seeder (29.7%); and of the manufacturer of electronic products and auto parts Mirgor - one of its main shareholders is Nicolás Caputo, friend of former president Mauricio Macri- (29.7%).

“The actions that have to do with consumption are better able to face a difficult year. We also believe that there will be an effort by the government to try to revive the construction, labor supplier, ”said an analyst, trying to elucidate an explanation of these exponential increases.

In the case of the Morixe, a large part of its strong progress on the stock market is linked to the good balance presented last week: it doubled its sales in the semester ended on November 30, reaching $ 1,856 million, and obtained operating profits for $ 114,638,271 in the middle of the crisis, beyond recording a final loss due to the impact of financial results and income tax. "His good balance was well interpreted by the 'located'," said an analyst.

Most of these companies consolidated the significant rebound in recent days, with double-digit increases, at a time when the market began a correction process in the fear that the Province of Buenos Aires will default.

On Monday, for example, the shares owned by the supermarkets that operate mainly in the south of the country and whose share capital is controlled by Federico Braun - uncle of former Cabinet Chief Marcos Peña - shot up 26.5%; those of Morixe, 11.7%, and those of Agrometal (+ 11.2%). And this Tuesday, meanwhile, Morixe climbed another 16.4%; TGLT gained 12.9%; and Agrometal jumped another 11%.

Rafael Di Giorno, director of Proficio Investment, explained that "sometimes it happens that certain investors see what the leading actions went up, and then look for in the general panel the roles that were delayed."

It is also worth noting that these actions, of limited liquidity, tend to rise and fall strongly with little volume. "They are very volatile companies, both Morixe, Agrometal, or PATA," said Di Giorno.

On Agrometal, a recent report by Bull Market Brokers highlighted that “while a new boom in commodities is being created by 2020, being the potentially favored field in a year with a rise in withholdings and taxes in general, leaving the net profitability close to zero for producers, some companies may be favored if the international price rally partially compensates for the rise in retentions ”.

Bull projects that “towards the end of January and especially February, with firm prices in soybeans, the consultations of the producers on machinery begin, thinking about the next planting that begins towards the winter season but that the producers plan months in advance” . “Under this scenario, we expect the general panel to be one of the best performing companies. Despite the illiquidity of the companies in this panel, Agrometal proved to be one of the best for its float and business management, ”he concludes.