With Brazilian Bovespa futures already halted for trading earlier after crashing 10% at the open... ... the circuit breakers has moved to the cash market, where moments ago the Bovespa was similarly halted after crashing 10% at the open. For those asking, here are the Brazilian circuit breaker mechanics: Cash: Rule 1: IBOV down 10% (60,786) triggers 30 minutes pause Rule 2: IBOV down 15% (57,409) triggers 1 hour pause Rule 3: IBOV down 20% (54,032) will be subject to Stock Exchange evaluation, likely it shuts down for the day And this is how Brazil just erased all of the year's gains in an instant (and per the EWZ which is down -15%, more pain is coming once the circuit breaker unlocks). Just before the circuit breaker was triggered, state controlled companies Cemig, Banco do Brasil and Petrobras fell 42%, 25% and 19%, respectively according to BBG. Banks Itau and Bradesco fell 18% and 19%, respectively, and JBS fell 15% as the Brazilian Bdloobath continued.. And even more dramatic chart is the 3x Levered Brazil ETF, BRZU, which was down 50% moments ago: At the same time Brazil's default risk is soaring, as shown by the country's CDS> So what now? According to the Citi EM Strategy team there will be a quick enough resolution of this issue to take the other side of those large moves in the short term and would stay on the sidelines for now. We expect joint intervention by the National Treasury in the form of bond buybacks and BCB through FX swaps, similar to actions taken during the peak of the political crisis in September 2015. However, they will not be enough to stop the sell-off, in our view. And some additional thoughts from Citi FX: EM FX is closely watching BRL, with the FX open ahead at 08:00 EDT / 13:00 BST. This is no surprise after we explained What happened to BRL here. Since that update, there’s more headlines coming out with talk of impeachment calls, and Senator Neves being suspended. However nothing confirmed yet. A full blown political crisis may just be unfolding. There are concerns about the circuit breaker. Note that the Brazil circuit breaker allows only trading on the exchange at the limit price for the day (6% on the day). It can trade lower than that but not higher, for the rest of the day. In the meantime, Brazilian assets continue to suffer. Check out the chart below from Bloomberg on Brazil’s EUR bonds. Meanwhile Brazil CDS is absolutely soaring even as we type, with the 10y spiking to 356, after staying around the 299 level earlier today. And for the BRL market open, it’s hard to say. USDBRL closed at 3.1395 and we’re certainly in for a wild ride. Our trader notes that on the first future, 3.30/3.33 is being eyed. As a reminder of what our local trader said overnight: “I would expect a round of stops at the opening, can imagine little initial fading appetite from investors who still have ammo (mostly foreigners, I would guess) and a potential joint intervention by BCB and NT (in case price action is as bad as some people are saying).”
Бразильская биржа BM&F Bovespa объявила об изменениях в формуле расчета основного фондового индекса Ibovespa. Изменение будет первым с 1968 г., что должно позволить более эффективно отражать изменение стоимости акций.
Бразильская биржа BM&F Bovespa объявила об изменениях в формуле расчета основного фондового индекса Ibovespa. Изменение будет первым с 1968 г., что должно позволить более эффективно отражать изменение стоимости акций. Согласно плану акции будут взвешены по новой формуле, которая учитывает рыночную капитализацию и ликвидность акций. Ликвидность будет рассчитываться на основе так называемого "индекса обращаемости", одна треть которого будет основана на общем количестве сделок по акции, а две трети основаны на общем объеме сделок по акции. Индекс Ibovespa включает в себя самые торгуемые бразильские акции, но его формула не менялась с 1968 г. Изменения в индексе будут осуществляться поэтапно в течение двух ребалансировок портфеля начиная со следующего года. В течение первого периода, который будет длиться с января по конец апреля, веса индекса будут рассчитываться с использованием средних значений, полученных с помощью старой и новой формул, а новый метод будет полностью реализован с мая 2014 г.
"I will not invest in Brazil because of government`s mistakes." - in 6º Congresso Internacional dos Mercados Financeiros e de Capitais da BM&F Bovespa Related ETFs: iShares Brazil ETF (EWZ), iShares MSCI Emerging Markets (EEM) Jim Rogers is an author, financial commentator and successful international investor. He has been frequently featured in Time, The New York Times, Barron’s, Forbes, Fortune, The Wall Street Journal, The Financial Times and is a regular guest on Bloomberg and CNBC.
Will they or won't they raise interest rates in Brazil Wednesday night? That is the question on the minds of emerging market bond traders and the interest rate futures traders in the pits at the BM&F Bovespa exchange in São Paulo.
Every day the Fed's control of all capital markets becomes greater and greater, and every day ordinary investors, and even habitual gamblers, realize they have had enough with participating in a rigged casino, in which the now completely meaningless and irrelevant level of the S&P or the DAX or Nikkei or the 10 Year bond is nothing but a policy tool in the global devaluation race to the inflationary bottom. And while we have shown the week after week of relenltess equity outflows as aging baby boomers call it quits and instead opt for return of capital (than on), the full impact of this boycott on Bernanke's usurpation of capital markets, in which a simple WSJ scribe can move the market more than the deteriorating fundamentals of the world's biggest company-cum-gizmo maker is best seen in trading volumes. Which as Securities Technology shows, are now down 19% in the first half of 2012. Of course, if one were to exclude the robotic presence in stock trading, which is anywhere between 50 and 70%, it would be a miracle to find any human beings still trading with each other. From STM Trading is down 18.9% from the first half of last year, according to statistics reported by members of the World Federation of Exchanges. All told, $26.4 trillion worth of shares changed hands, nonetheless. Of the three regions of the world tracked by the WFE, the Americas fared best. Volume at North and South America member exchanges was down 14.3% and accounted for half the world volume, at $13.8 trillion. The decrease in trading volumes in the Americas region was “further pronounced by a 25% drop in number of trades,’’ the WFE said. Faring the best was BM&BOVESPA in Brazil, down just 1.1%. Nasdaq OMX Group came in at -9.5% down. NYSE Euronext at 18.1% down. Direct Edge and BATS Global Markets statistics are not gathered by the WFE. The dollar volume of trading fell 21.5% in Europe, Africa and the Middle East. Trading in Asia and the Pacific region fell 22.5%. The total market capitalization of companies listed on WFE exchanges increased by 5.3% in the first half of 2012, however, the trade group said. But capitalization remains below the level of one year ago. Bond trading on exchanges declined for the second consecutive half-year, at 9.3% down, the WFE said. That represented trading worth $14.2 trillion. The European – Asia – Middle East region led the decline at -11.0%, while bond trading in the Asia-Pacific region increased 24.4%. Trading of exchange-traded funds in the Americas also plunged, by 33.7 percent. That led to ETF turnover of $4.0 trillion in the first half. The Americas region represents more than 88% of total WFE turnover in ETFs. The 18.9% plunge in trading, worldwide, actually is a slight improvement. After the first three months of 2012, trading was down 19.4%, year over year. Which begs the question: we all know the only real mandate of the Chairman is to keep the S&P artificially elevated - even the Fed has admitted as much - but why, when it is becoming increasingly obvious that fewer and fewer people have any real wealth tied into the daily levitation of the ES