The amount exceeds the amount withdrawn in the whole of 2019, of R$44.5 billion. The withdrawal speed is also a record and exceeds the daily average of 2008.
As of March 4, foreigners have withdrawn R$44.8 billion from the Stock Exchange in 2020. This amount exceeds the amount withdrawn in the entire year of 2019, of R$44.5 billion, not counting share offerings (IPOs and follow-ons).
The outflow also exceeds and is the largest historical series of B3 since 2008. In values adjusted for inflation, R$44.6 billion were withdrawn in the year of the financial crisis. The outflow speed is also a record, around R$1.05 billion per trading session.
Considering initial public offerings (IPOs) and subsequent public offerings (follow-ons), the foreign balance is negative by R$33.4 billion this year. Considering these operations, in 2019 the outflow was R$4.7 billion.
Coronavirus and the impact on the economy
The reasons for foreigners to withdraw money from Brazil and other emerging markets are mainly due to investors' great fears regarding the economic impact of the coronavirus. In addition, the slowdown in the global economy and the delay in the progress of administrative and tax reforms.
The outflow contributes to a higher dollar exchange rate. On Thursday (5), the American currency hit its new nominal record, reaching R$ 4.653. This Friday (6), the exchange rate fell 0.5%, to R$ 4.63 at around 1:10 pm. The Stock Exchange has its second consecutive trading session of strong decline, with a drop of 3.8%, to 98,357 points, its lowest level since August 28, 2019.
Brazil's country risk, measured by the five-year CDS (Credit Default Swap), a type of contract that acts as a thermometer of investor confidence in economies, rose by 10% to 142 points. It was the highest level since October 2019, before the pension reform was approved in the Senate.
Last Thursday (5), the Brazilian CDS rose 14.4%. It was the largest daily percentage increase since the so-called Joesley Day, on May 18, 2017. On that day, information was made public that Joesley Batista had recorded a conversation with then-president Michel Temer (MDB). At the time, the country risk rose 29%, to 265 points.
The indication of the CDS rising is that investors are fearing for the country's financial future; if it falls, the message is the opposite: it signals that there has been an increase in confidence regarding the country's ability to pay off its debts.