Brazil Special Report: Abandon all hope?
A secondary nosedive for OGX following a jumbo IPO adds to the gloom in Brazilian equity. There are hopes of a rebound, but the short-term outlook is bleak.
by John Rumsey
Eike Batistas ability to launch a $4 billion IPO for his
OGX petroleum company in the face of tempestuous market
conditions lightened the gloom in Brazils equity capital
markets late spring. But celebrations were short-lived. OGX
shares plunged more than 50% in the first two months of trade,
while the Bovespa dropped more than 20%.
OGX suggested that at least commodities were immune from the
market slump. But Vales disappointing $11.6 billion
global equity issue, the largest ever follow-on from the
Brazilian market has given the market the willies. The mid-July
deal secured just 75% of targeted funds at a discount of
5.4%-6.4% depending on share class, and Vale plunged some 40%
over two months to July, albeit after a large run up.
Primary market data starkly illustrate how quickly conditions
have soured. In...
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