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Tuesday, October 4, 2022

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    Why did Magazine Luiza (MGLU3) fall after Copom ended the Selic highs cycle?

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    Not only Magazine Luiza, but Via (VIIA3) and Americanas (AMER3) closed down today (Image: Shutterstock)

    O Magazine Luiza (MGLU3) was among the biggest drops in the Ibovespa this Thursday (22), going against the general good mood in the Brazilian stock market. The role of the retailer retreated 3.16%, to R$ 4.60.

    THE American (AMER3) also dropped today. Not even the most relevant news of the week, which was the decision of the Monetary Policy Committee (Copom) of the Central Bank (BC) to end the cycle of monetary tightening in Brazil, contributed to the shares engaging a new session with significant gains.

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    the sector of retail was one of the most impacted by inflation and rising interest rates in recent months. Therefore, the decision of the monetary authorities to keep the Selic stable at 13.75% would, in theory, benefit companies in this segment.

    Why, then, did the papers fall?

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    For Leandro Petrokas, research director and partner at Quantzed, the fall in Magazine Luiza shares is a profit-taking movement.

    “It is worth noting that the paper, yesterday, rose 6.5%. It was one of the biggest highs on the trading floor. In fact, Via also rose strongly”, recalls the analyst.

    Petrokas points out that the sector was already on a path of strong recovery on the stock market after the slump of recent months.

    “The paper came to present, from the minimum to the maximum, a very important movement of recovery, when the market already began to understand that it would be the end of the monetary tightening. At interest curves of the market have already started to cool down, and this quickly pulled retail stocks, which had been in a strong downward movement”, he explains.

    In the assessment of the analysis team of Ativa Investimentos, the retail sector operated in decline this Thursday due to the negative impact of high interest rates abroad, added to an unfavorable global macroeconomic scenario.

    The Federal Reserve (Fed), the central bank of the United States, announced a new 0.75 percentage point hike in the US interest rate, taking it to the range of 3-3.25%. The Fed has also signaled that further significant increases could come going forward.

    The Fed’s toughest statement and the speeches of its chairman, Jerome Powell, sent US indexes down, with Nasdaq closing Thursday down 1.37%, S&P 500 down 0.84% ​​and Dow Jones down 0.35%.

    MGLU3 is no longer attractive?

    With the recent rally in stocks in the retail sector from e-commercedoubts about Magazine Luiza’s attractiveness reappear.

    Marcos Peixoto, partner and manager responsible for XP Asset’s equity unit, in the Outliers podcast, by XP Investimentos, was not very optimistic about Brazilian e-commerce retailers.

    Peixoto said that companies in the e-commerce segment have “little competitive advantage and little value for the consumer”.

    BTG Pactual highlighted, in a new report on the recovery of the sector in the second half of 2022, that it has a purchase indication for 19 of the 26 Brazilian retail stocks it monitors.

    Magazine Luiza is included in the buy ratings wave, with a target price of R$7.

    Analysts Luiz Guanais, Gabriel Disselli, Victor Rogatis and Luiz Temporini reinforced, however, that they prefer a mix exposure to economic reopening, but with pricing power, solid momentum and/or inflation protection.

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    Source: Moneytimes

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