Feeling Sao Paulo’s bouncing financial pulse

A Brazilian fan waits for the start of the match between Brazil and North Korea.SAO PAULO — Promised lengthy congestion, wealthy executives whizzing between meetings by helicopter and streets stuffed with boutiques any shopaholic verité would be happy to place a perfectly manicured toe into before reaching the great big mall in the sky, Sao Paulo failed to live up to its reputation on Tuesday afternoon.

International designers kept themselves and their wares under lock and key, the skies were free of mechanical birds although transport, both public and private, was true to form in a permanent state of gridlock. Was this a Black Tuesday?

In fact, it was green-and-yellow Tuesday. Five days into the World Cup, it was day one as far as 12 million Paulistanos were concerned as it was their first foray into South Africa’s sporting extravaganza. And that could only mean one thing in Brazil’s financial capital, and the richest, most populous city in Latin America — the afternoon off. While investment bankers streamed out of their glass towers wearing their team’s strip, heading for bars and cafes, the Herald’s own particular pre-match scenario involved 40 minutes waiting for a taxi and another 40 minutes in a taxi albeit entertained by the live sports on the in-car flat screen TV. Rush hour (part one) had begun unusually early and timing was bad ahead of the 3.30pm kickoff.

‘INTERRUPTIONS’. Although the usually bustling BN&FBovespa, Latin America’s most important stock exchange — commonly called Bovespa — said on its website last week that trading would not be affected by Brazil’s World Cup games, that perspective changed seven days later. Following a Brazilian Central Bank decision, according to BN&FBovespa, “there will be interruptions in the operations of the spot US Dollar trading systems, as well as in the regular time frames for registration and contracting of transactions with the Foreign Exchange Clearinghouse.” A possible sigh of relief all round: although we’ll physically be at work, please try not to bother us as we’ll be watching the game too!

Eerily quiet for an hour and a half despite two unanimous yells of glee in the 55th and 72nd minutes reverberating round the Jardins neighbourhood, after the 2-1 win against North Korea normal activities — trains, buses and helicopters included — were resumed at around 5.15pm when contented Paulistanas began winding their way home, ready for a new day.

BACK TO NORMAL. And so it was on a regular Wednesday, not black, green or yellow, that the Herald visited BN&FBovespa. In a city that came to a standstill for a few hours the day before, it was as if the game never took place apart from the previous day’s tokens of flags a-fluttering in the breeze.

With two headquarters located on leafy, crowded XV de Novembro road, the Exchange’s buildings are low profile. Squeezed in between cafés and noisy streets sellers flogging flags and glittery Brazil T-shirts, a simple sign above the entrance leads the way into the continent’s financial hub.

Following its demutualisation in 2007, the result of a 2008 merger between the Sao Paulo Stock Exchange and the Brazilian Mercantile and Futures Exchange created the world’s third-largest stock exchange and couldn’t have come a moment sooner. Brazil’s economy was booming and despite a few months’ wobble, which led to a 6.2%-percent fall in the Exchange’s 2009 gross operating revenues following the global economic crisis which shook the US and Europe (gross revenue totalled R$1,672.9 million compared with R$1,783.4 in 2008), Bovespa saw a record number of transactions take place (81.75 million) last year regardless.

To put those figures into perspective, green-and-yellow Tuesday June 15, saw 26,866 trades take place with more than one and a half million contracts traded that same day, while the maximum number of trades in a single day is 151,233.

2009 also saw the second-largest volume in terms of capital raising with R$46 billion regardless. Six IPOs were responsible for R$23.8 billion while R$22.2 billion was raised in the 19 subsequent follow-ons.

COME, SEE, BUY. Founded in 1890, the original trading floor at ground level now functions as a tourist attraction which brought in 120,000 visitors last year or around 450 a day. Given that the Exchange places great importance on its Home Broker scheme which launched in 1999 to allow individual investors to trade online, it makes sense that a slice of those investors might want to take a look at the way their money works. “We are taking on the bold goal of attracting five million new investors in the next five years,” said Bovespa’s chief executive Edemir Pinto.

And despite the global ripples, 2009 still saw record numbers of individual investors who accounted for 30.5 percent of total volume traded in equities, derivatives, fixed income securities, federal government securities, financial derivatives, spot foreign exchange and agricultural commodities, principally coffee, live cattle, sugar, corn and soybean.

Investors of the future make up a substantial chunk of visitor numbers, and yesterday was no different.
Several groups of teenagers were given a mock trading demonstration, and although they aren’t permitted it to the real floor, which is now electronically managed fully, the twinkling screens and bellowing traders put on for their benefit gives an insight into days gone by.

Privy to a sneaky look at the derivatives controllers, the office is all in fact peace and tranquillity. The days of relentless “buy, but, sell, sell” really are in the distant past. In this section, apart from one secretary, there is one female employee to every 10 men, and just six women work in this area, a surprisingly low number given that the Workers’ Party (PT) Dilma Rousseff may be the first woman to be voted in as Brazil’s next president.

Just like in Tuesday’s match against North Korea, a calm atmosphere prevails in Sao Paulo’s Bovespa stock exchange. But as Brazil begins its quest to reach the World Cup final, it will be fascinating to see just how far that attitude is carried by employees of the world’s third-largest stock exchange.

Read it in the Buenos Aires Herald too, from Thursday, June 17, 2010.

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