TUESDAY, MAY 13, 2014
BRASILIA–Brazilian stocks fell Tuesday after the government delayed a tax increase on beverages until after the World Cup, while the currency kept its recent strength against the dollar.
The Ibovespa stock index closed at 53907 points, down 0.27%, according to the BM&FBovespa exchange operator.
The Brazilian real exited active trading at 2.2152 Brazilian reais per dollar, stronger than Monday’s close of 2.2189 Brazilian reais per dollar, according to Tollett Prebon via FactSet.
Brazil’s Finance Minister Guido Mantega said Tuesday that the government was postponing an increase in taxes on beverages that analysts say will result in higher retail prices.
The tax hike was expected to happen in the first half of the year, but Mr. Mantega said it will happen three months from now.
The government is under pressure to improve public finances. It is also fighting resilient inflation, which now stands at 6.3%, above the official target of 4.5%.
Mr. Mantega said that beverage-industry officials agreed to keep their prices stable, in exchange for the tax postponement.
Brazil’s beverage producer and distributor AmBev SA, a unit of Belgium’s AB InBev, went to 17.03 Brazilian reais per share after the announcement, from a low of 16.46 Brazilian reais prior to it. It closed at 16.60 Brazilian reais, down 0.48%.
Before the tax delay announcement, AmBev had said the planned increase would cause the company to reduce investment in Brazil.
Among Brazil’s blue chips, state controlled oil concern Petroleo Brasileiro SA, or Petrobras, closed at 17.96 Brazilian reais, down 0.39%; and miner Vale SA fell 0.11% to 27.60.