Trading Slowdown Showing as Brazil Readies for World CupJulia Leite
The opening game of the World Cup is six days away, but traders in Brazil are already more focused on soccer than stocks.
Trading volume was below 4 billion reais ($1.8 billion) every day this week through yesterday, according to data compiled by Bloomberg. The last time transactions didn’t breach that mark for four consecutive days was in February 2009, the data show.
“The World Cup effect already started,” Felipe Rocha, a strategist at Guide Investimentos, said by phone from Curitiba, Brazil. “If the World Cup was being played anywhere else, volumes would already be dropping. Now that it’s here, it will be very slow.”
Sao Paulo declared a holiday for June 12, the first day of tournament play, meaning there will be no trading. On the other days Brazil plays -- June 17 and 23 for first-round games -- the stock and derivatives market will close two hours before the start of the matches.
While there was a pickup in volume today as the Ibovespa surged the most since March after polls showed President Dilma Rousseff losing support before October’s election, trading will be reduced this year because of the tournament, BM&FBovespa SA Chief Executive Officer Edemir Pinto said in an interview at Bloomberg’s office in Sao Paulo last month.
Trading was 8.6 billion reais today in Sao Paulo, data compiled by Bloomberg show. Volume had also slowed this week as investors awaited the results of the political poll and U.S. employment data, Rocha said.
Daily volume has averaged 6.6 billion reais this year through June 4, according to data from the exchange. It slumped 15 percent in May from the previous month, and has dropped another 19 percent so far this month.
Brazil, whose standout player is 22-year-old forward Neymar da Silva Santos, is favored to win the trophy this year, according to data compiled by Bloomberg Sports. Goldman Sachs Group Inc., UBS AG and Unicredit SpA also predict the team will win a record sixth title.
The country’s games spurred a 75 percent decline in local volumes during the last World Cup in 2010, according to a European Central Bank study. The biggest drop among 15 countries surveyed was in Chile, where trading tumbled more than 99 percent when the national squad was playing. The median decline was 55 percent.
“In 2010, I had to watch most of the games at my desk,” said Rocha, who plans to root for the Brazilian team this year from home. “Not this time.”