Spanish companies with exposure to Brazil increased by 4.5% over the year

Companies in the Spanish market with a foothold in Brazil are celebrating the good year that the Carioca currency is experiencing to the rhythm of samba. The first bars of 2022 are very positive for the Brazilian real, which is revalued by 5.8% against the euro, and that this is not a year of weakness for the European currency: it is revalued without exception against the 10 most quoted currencies on the trading floor. But the real does not stop, and imposes itself as the emerging currency which appreciates the most in the year in the crossing that it maintains with the euro.

The real’s good year is directly linked to the success of the Central Bank of Brazil in its crusade to control inflation in the country. It is the central bank that makes the most aggressive monetary policy on the planet in recent months, since it has raised official interest rates up to 8 times, since the start of the increase process in March 2021, from the 2% at which they were established at the time, to 10, 65% currently, and is expected to continue to rise to 11.75% by the end of this year.

With this policy, the central bank succeeded in bringing inflation down to 10.38% in January, a figure that may seem very high, but which is in line with analysts’ expectations, while in other regions of the planet, like the United States and Europe, the cost of living exceeds consensus forecasts. It goes without saying that Brazil serves as an example for other emerging economies that continue to struggle with high inflation, such as Turkey.

With this policy, the central bank succeeded in bringing inflation down to 10.38% in January, a figure that may seem very high, but which is in line with analysts’ expectations, while in other regions of the planet, like the United States and Europe, the cost of living exceeds consensus forecasts. It goes without saying that Brazil serves as an example for other emerging economies that continue to struggle with high inflation, such as Turkey.

“The pace of inflation gives the central bank some breathing space, allowing it to think about the future of its monetary policy without having to be overwhelmed by market pressures,” said Carla Argenta, chief economist. at CM Capital Markets in São Paulo.

The Spaniards celebrate it

The revaluation of the Brazilian real is an opportunity for Spanish companies that have a foothold in the country’s market. For many investors, thinking of a Spanish company with operations in Brazil automatically leads to thinking of Telefónica, Banco Santander and Iberdrola, but the list is longer; in addition to these three firms, Ezentis, Aperam, Dia, CIE Automotive, Gestamp, Mapfre, Sacyr or Aena derive part of their income from their activity in the South American country.

And the year is going well for them on the stock market, in general. Even less its exposure to Brazil is the only cause, but it is one of the points in favor that these companies have in the year. On average, these 11 companies appreciated by 4.5% over the year, an increase higher than the 2% of the Ibex 35.

Thus, in October 2021, the Ezentis group is the one with the most exposure to the country of samba, with 35%. Among the most notable transactions are the expansion and renewal signed with TIM Brazil to renew its operation and maintenance contract for mobile towers and start providing fiber optic maintenance services in various regions of the country for an amount of 254 million Brazilian reais (about 38 million euros) .

Santander would be in second place in terms of percentage of activity, with 23.5%, at the end of 2021. And, Brazil has become the spearhead of the financial institution, since the 3,752 million euros in profit obtained by the bank until June 2021. , 1,324 million euros came from the Latin American country.

At the end of 2021, Mapfre closes the top 3, with a weighting of 19.7% in Brazil. The group chaired by Antonio Huertas made progress last year in “all regional areas and business units”, according to the company itself. On the other hand, in Brazil, the profit fell by 26.8%, to 74.3 million, despite an 8.3% increase in premium income and placing them at 3,340 million euros.

Aperam, which is rebounding 10.45% off the floor so far this year; Telefónica, with an increase of 14% and Iberdrola, which is the company in the table that has left the most this year, with a drop of 7.9%, share the turnover in Brazil, with respectively 17.74 %, 17.62% and 17.4%.

On the other hand, at the bottom of the table would be Sacyr, with a capitalization of 1,439 million and an exposure of 1.48% to the Brazilian market, in October 2021, but in the context of a considerable increase in this figure in the hands of of Sacyr dealership, which reaps successes that strengthen the field of work in this country, where in recent years it has been in charge of operating and duplicate the RSC-287 toll highway, in the state of Rio Grande do Sul, as well as the extension of line 2 of the São Paulo metro.