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Weak economy in 2022 will affect Stock Exchange; see sectors that will suffer

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The Brazilian economy will slow down next year and this will affect stock market profits, according to market professionals. Certain sectors will be more affected than others, and the investor will have to be more careful in choosing a company for his portfolio, underline the specialists.

According to projections made by more than 100 financial institutions and consultants for the Focus Bulletin, of the Central Bank, the gross domestic product (GDP) will increase by 1.54% in 2022. This is less than the 5.04% that the same specialists are projecting for the Brazilian economy in 2021. See below the sectors that will be most affected, the companies that could escape this unfavorable environment and the application strategies, according to the specialists heard by UOL.

How weak GDP hinders the stock market

When the GDP decreases or increases a little, it means that the economy as a whole has performed poorly in terms of production, sales and consumption by companies and consumers operating in this market.

O CEO given Planner Broker, Alain Gandelman, points out that the growth of 5% of GDP this year is strong because in 2019, the Brazilian economy had fallen by 4.1%. The basis for comparison was therefore very low.

In addition, he points out, inflation is higher than the advance of the economy. Thus, real GDP growth in Brazil has even been negative. What affects businesses.

We buy a stock because we believe that the results of the company will improve, which will translate into appreciation of the stock and better dividends, for example. But if the results are not going to be better, with a weaker economy, the interest in the action decreases.
Alain Gandelman, CEO of Planner Broker

And he still has the highest interest rates

Besides the more modest economic growth in 2022, the stock market faces another adversary, which is the rise in interest rates. Since March, the base interest rate, the Selic, has been raised by the Central Bank, in a government attempt to control inflation, which is expected to close 2022 at the highest level since 2015.

The base interest rate increased from 2% to 6.25% per annum and, according to market projections in the Bulletin To concentrate, rises to 8.75% next year.

When interest rates rise, businesses must pay more to borrow and invest, just as loans to families become more expensive. The result of this combination is a drag on the economy.

In addition, the higher the interest rates, the better the earnings of fixed-income investments, which are starting to become more attractive than the stock market, underlines the CEO of the analysis house. Ohmresearch, Roberto Attachment.

Some of the impact has already happened

Larissa Quaresma, Research Analyst at the Analysis House empirical, argues that weaker economic growth in Brazil in 2022 and rising interest rates have already reached the stock market because investors act with expectations. So the impact of lower GDP in 2022 is already hampering the stock market now, she says.

See below how some stock market indices are behaving following companies in different industries this year.

  • Ibovespa: 4.67%
  • Basic materials (raw materials): + 6.96%
  • public services: -0.92%
  • Electricity: -4.39%
  • consumption: -11.22%
  • financial: -14.75%
  • immovable: -24.99%
  • BDR: + 22.21%
  • I repare (real estate funds): -4.96%

3 sectors that should suffer the most in 2022

  • Retail sale of durable consumer goods: the shares of companies that depend on economic growth and sell non-essential products, such as household appliances, should suffer more in 2022 with a weak GDP, underlines the specialist of the actions to Clear Broker, Pietra War. According to her, these are purchases that the consumer can postpone in times of crisis in times of uncertainty about employment.
  • Builders: with the economic slowdown, which limits the improvement of the income of the population and, by extension, consumption, the real estate sector is also impacted by the rise in interest rates, which increases the cost of financing, affecting sales new projects.
  • services: The shares of companies related to the travel sectors, such as car rental companies, airlines and education also depend on the increase in income and employment in the country to increase sales and, for example, therefore, the profits. These segments should have a more limited margin of appreciation in a year of weak GDP, underlines the director of the variable income desk at lifetime Investments, Victor Carettoni.

We have healthy companies, with liquidity and good sales prospects, but which end up being affected by the more difficult macroeconomic environment.
Pietra war, of the Clear Broker

4 sectors that should be doing well even with low GDP

Here are some deals that could serve as a safe haven for equity investors in 2022.

Raw material exporters: in this group are found mining companies, which produce and sell ore to other countries; steel mills, which sell steel; pulp and paper exporters, in addition to slaughterhouses. These are companies that depend more on global growth than on the performance of Brazilian GDP, stresses Roberto Attachment.

The bet on the performance of Brazilian exporters of metals, steel, paper and cellulose and animal proteins is unanimous among all the professionals heard by UOL.

Banks: Rising interest rates can help banks make better use of the money they invest in the financial market. In addition, the sector has posted profits even during the crisis years and has lagged stock prices, analysts say.

Interest is income for the banks. The banks benefit from the interest.
Larissa Quaresma, from empirical

Retail sale of basic necessities: Shares of chains that sell food, like supermarkets, and drugs, like pharmacies, are expected to perform positively next year, even with weak GDP, market analysts say.

Food and health are items with less room for spending cuts in family budgets, even in times of weaker economic growth, says equity specialist at Clear Broker, Pietra War.

BDR: the world economy will grow more than the Brazilian GDP, underline the economists. IMF (International Monetary Fund) projections forecast an increase of 5.9% for the world economy, 6% for the United States and 8% for China.

The Brazilian stock market will continue in 2022 to underperform other world stock markets.
Roberto Attachment, give Ohmresearch

How to change the application

Investors shouldn’t try to adjust their portfolios overnight, selling stocks that might be affected by GDP low in 2022 to bet on sectors that should do well.

Before, each person must make a detailed assessment of his own portfolio and consider the objectives of this invested money, emphasizes Pietra war, of the Clear Broker.

According to her, the decision to change portfolio depends, for example, on when the person went public and how long they planned to hold the investment.

The portfolio must be consistent with the objective and risk profile of each investor. Now is not the time to sell everything, but neither is it the time to go out and buy anything.
Pietra war, of the Clear Broker

For those who are just going public, the recommendation reinforced by all analysts is to focus on the long term and not to seek cash with quick trades, to win with bets in less than a year.

In 2022, the stock market will experience another year of volatility. It will be more difficult for anyone who wants to settle bets in the short term. It will not be this holiday for the small investor, who won easily in 2018 and 2020.
Alain Gandelman, give Planner Broker



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