Brazilian stocks slumped more than three percent on President Luiz Inacio Lula da Silva’s first business day in office Monday, led by a selloff of shares in state-run oil company Petrobras.
A day after the veteran leftist took office for a four-year term, succeeding far-right president Jair Bolsonaro, the Sao Paulo stock exchange’s Ibovespa index was down 3.25 percent in afternoon trading.
Petrobras was among the biggest losers, with preferential shares falling 6.6 percent and ordinary shares 5.71 percent.
Analysts say investors are worried over signs of increased government intervention in the economy under Lula, who previously led Brazil from 2003 to 2010.
Petrobras is especially in the spotlight, after Lula extended federal fuel-tax cuts and vowed to change the company’s pricing policy.
“The market’s reading is that there will be more and more interference in state companies, after a period of more free-market policy making” under Bolsonaro, said financial analyst Gilberto Braga of research university Ibmec.
Lula’s pick for chief executive at Petrobras, Senator Jean Paul Prates, said Friday he wanted to change the company’s pricing policy, which currently pegs what consumers pay for fuel to global prices.
Lula, who has also said he favors a price policy overhaul, added to market jitters Monday when he nixed plans launched by Bolsonaro to privatize eight state companies, including Petrobras.
During his campaign, the 77-year-old ex-union leader criticized privatizations of state firms and said he would halt such sell-offs if elected.
