The Bovespa index has been trading down lately on concern that government intervention will worsen earnings of state-controlled companies including Petrobras.

What bothers investors is the perception that the government is putting its goals ahead of the companies. Petrobras has been being forced to sacrifice revenue so that the pressure on inflation eases. And by the way, it has been delaying (or defaulting?) on payments to its suppliers in order to keep a healthy cash flow and not squeeze further its bottom line.

Colombia’s state-controlled oil and gas giant Ecopetrol has been eclipsing Brazil’s Petrobras on the New York Stock Exchange. Ecopetrol’s market capitalization increased to $129.95 billion on the NYSE, overtaking Petrobras, currently valued at $121.87 billion.

The 25% increase in value of Ecopetrol pushed the company past Petrobras after the state-governed Brazilian energy company lost nearly 40% of its value over the same period.

Brazil President Dilma Rousseff’s caps on oil prices and nationalist policy stance toward Petrobras have interrupted its expected ascent after high potential finds in deep waters off the coast of Brazil in 2007.

Having said that, giant bank Itau (one of Petrobras analysts) sums it all by recommending clients to short Petrobras shares… see below (thanks to Mansueto Almeida).

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3 Responses to Even Itau bank is recommending to short Petrobras…

  1. 18,50 era o suporte e ponto de pivot. Papel já atingiu e rompeu esta linha ontem, mantendo a tendência de queda. Já está abaixo dos 18,00.

  2. Rodrigo Rodrigues(Official) says:

    Banks are businesses and they employ and remunerate on success ..their sucess not yours !  It is naive to presume that they are employed to advise. They are paid to sell and do so within the rules. Only a minute proportion of population will ever pay for advice up front, therefore I think we should accept that we are being sold to. 
    The problem with investing is this…………..when investments and the markets are going up customers love it – the advisers are the best thing since sliced bread… when they go down – the advisers are hard sell salespeople and clients never knew they could go down in value.
    Rewards to bank staff for selling products should be banned, all staff should be on salaries only
    By now all Brazilian bank account customers should have learned the lesson – never trust the bank to advise you on anything and always seek assistance and independent alternative advice – as banks just cannot be trusted by consumers
    What’s behind this Itau advice?
    If tomorrow an itau customer goes to their desk ( Even using the same estrategista who told you to sell your assets)They will be selling you the same toxic assets .
    Is it possible that they want to ” help” and screw you at the same time?
    The answer is yes when you become a pathological liar.

  3. frank stein says:

    Petrobras is delaying payments to suppliers. Notice the fall of Saipen who provides oil services to Petrobras. The cash flow crunch will inevitably lead to new stock issue diluting present shareholders. There are also rumors they may have to bail out failed “oil man” Eike Batista.

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