Early 2010: Investors in Petrobras (PBR) hear about the Brazilian government’s plan to issue more stock for the state-controlled oil company and buy most of it.
September 23 2010, President Lula da Silva is quoted by financial news outlet Bloomberg News:
Previous governments “only went to the stock exchange to sell public companies,” Lula said Sept. 21 at a railway inauguration. “I will go to the stock exchange to capitalize Petrobras.”
“Petrobras will be richer, more powerful and stronger, and consequently Brazil will richer, more powerful and stronger,” he said.
June 2013, we can see how much stronger and more powerful the company became once shareholders realized that the government would look out for itself, rather than minority holders:
What’s a little 8-year low between friends? And yes, that volume spike there? That was Sept 24, 2010. The stock barely moved that day. That is the picture of “smart money” leaving.
From what I can tell on this here table, Brazilian rubes are included among “other entities.” They have 2.44 billion shares, 18.7 percent of the company, while all other global investors hold 34 percent. The balance is held by various government agencies. Since Brazil’s stock-owning classes make up a tiny part of the world’s investors, those Brazilians have taken a uniquely serious hit on this price decline. How much of a hit? On the decline from, say, $40 a share to $15, you’re talking $25 a share, or $61 billion in lost wealth for Brazilians just on Petrobras’s share decline. Much of that is probably coming out of pension funds for regular people.
So much for “richer, more powerful and stronger.”
PS: I should be clear that I’m no expert on Petrobras, and I know I’m being very simplistic by assigning the stock drop to that one move by the government, without looking at the general shift out of emerging markets, the regulatory problems for the presalt, and probably many more elements I would know about if I spent more time paying attention to Wall Street. Regardless, I think the volume spike alone shows that Lula’s words mattered.