One of the most popular stocks on the Brazilian Stock Exchange (B3), the role of retailer Magazine Luiza (MGLU3) has dropped this Tuesday (3). At 1:30 pm (Brasília time) the stock was down 3.75% to R$4.62.
Tomorrow (4) will be Super Wednesday, the name given to the day the Federal Reserve (Fed, the American Central Bank) will disclose how much the US interest rate will rise. This week, the Brazilian Central Bank (BC) will also announce the new interest rate and the Monetary Policy Committee (Copom) will disclose the next steps in relation to monetary policy.
Understand how expectations of higher interest rates —both in Brazil and abroad— can negatively affect Magalu, as it is popularly called, and if experts heard by the UOL recommend buying the stock.
Magazine Luiza (MGLU3) is not a stock that has performed well. This year, the paper accumulates a loss of 30.80%. In 12 months, the decline is 76%. Only in April, when the Ibovespa, the main index of the B3, retreated 10.1%, the shares of the chain of stores and e-commerce went back by 28%.
Although it is a solid and well-managed company, Magalu suffers from the difficulties imposed by the current economic scenario, with high inflation.
In addition, there is also an increase in competition in the sector, as highlighted by market analysts. Foreign rivals such as Alibaba, Amazon, Shopee and Shein are investing in local logistics capability.
“Note that the entire retail sector is falling,” says Lívia Rodrigues, an analyst at Ativa Investimentos. What influences this general drop are the prospects for interest rate hikes in both Brazil and the US. According to experts, this harms Magalu.
“Despite the increasing diversification of categories, sales in stores still focus mainly on durable goods – products of higher average price, dependent on a credit that has been getting more expensive at high speed”, says Magalu herself, in a recent report.
The retailer will release its results for the first quarter of this year on May 16.
What to do with Magalu’s shares?
Active has a neutral recommendation for action. That is, if the investor already has an investment in the company, it is recommended that he maintain it, but without making new investments. For those who do not yet own the company’s shares, it is not recommended to invest in it.
XP also has the same indication of neutrality. “Although we believe that there is still plenty of room for the company to grow, we see a challenging short and medium term scenario”, says the bank.