As stock exchanges fluctuate worldwide, Brazilian IT companies hold their own
For example, on March 17, Ideiasnet stocks trading on Bovespa fell more than 3 percent. Following the same pace, Totvs Group -- one of the main ERP players in Brazil -- also saw its price drop.
Among equipment vendors, Positivo Informatica and Bematech showed a decline of about 8 percent in stocks prices on the same day.
However, as a popular Brazilian proverb says: "Calm always comes after the storm." And on March 18, these companies' stock prices had recovered the loss registered a day before.
These constant oscillations will define the next month's scenario, according to some Brazilian market watchers. "The capital ventures market should continue to be very volatile, switching between an up-and-down stocks move," predicted Pedro Vartanian, a teacher at Trevisan Escola de Negcios (Trevisan Business School).
According to Vartanian, the intense movement at the stock exchanges in recent weeks is a result of the investors' fear that the crisis in the U.S. may expand to other American sectors and to other countries. And the current Brazilian economy, even though it is more stable than last year's economy, continues to follow external variations.
Vartanian said that expectations are positive related to the medium- and long-term situation of IT companies that have bonds traded at Bovespa. The reason, he says, is because the services offerings are expected to grow, maintaining these companies' profitability.
"It's very difficult to foresee the market stabilization, due to the uncertainties that surround American economy," he said, emphasizing a possible macro-economical normalization only after the end of the first semester of 2008.
However, Brazilian Finance Minister, Guido Mantega, said he is confident about Brazil's prospects despite global market oscillation. "Brazilian economy has not suffered any consequence of this crisis yet. We are paying attention to the situation, and we will make any necessary decisions if Brazil is affected," Mantega said.
Principles Preserved
Monica Molina, investor relations director of Brazilian management applications vendor Datasul, put the company's position in context in the current market. "We understand that this instability doesn't affect our growth capacity," she said.
Monica said macro-economic oscillations, typically, don't impact solid companies. The losses are momentary and generated by the move of capital to other more traditional economy sectors, she said. Over time, these companies' stocks can recover its value.
The reason, she said, is because investors prefer to retain their bonds, since they know the management practices of the companies in which they allocate resources.
In addition, another factor strenthens the position of IT companies. "The software market has a defensive revenue model," Molina said, adding that, if a crisis does happen, Datasul clients should continue investing in solutions in order to maintain and enhance its competitiveness.
Datasul is capitalized at abuot $290 million (R$500 million). In the last 23 months, it has acquired almost a dozen companies that complete its portfolio. Last month, company stocks grew between 15 percent and 20 percent. "Almost two years after the public stock offering, we are an international company with a wider product portfolio, and stronger distribution channels," Molina noted.
Bad Timing For An IPO
According to Vartanian, the teacher, this is an unfavorable time for an IPO (Initial Public Offering). "Many companies requested its registration, but they decided to wait for a better opportunity," Vartanian said.
"In a crisis situation, investors haven't any desire to make investments, and they want to pay for stocks a price lower than the usual market price," he said.
Long-Term Investments
On the other hand, the current market instability may be interesting for investors that want long-term ROI, he said.
"For more aggressive investors, crisis situations are a good opportunity to buy stocks," Vartanian added. But for those who want to obtain short-term profits in this market, Vartanian said this isn't the ideal moment.
"In the IT market, I recommend software developer companies, because it's a segment that has growth potential," Vartanian said.
This story originally appeared in Portuguese