Rising political tensions after Independence Day holiday demonstrations collapsed stocks Eletrobras (ELET3) this Wednesday (8). Investors are concerned that President Jair Bolsonaro’s excited tone and backlash in the National Congress and Federal Supreme Court could jeopardize the privatization of the state-owned electricity company.

For this reason company common paper fell 9.29% to R $ 34.29, one of the Ibovespa’s biggest victims… already Eletrobras promotions Classes A and B fell 15% and 8.89%, respectively, to R $ 65.45 and R $ 34.95.

During the protests on September 7, the president of the republic shouted against the ministers of the Supreme Federal Court (STF), in particular, Alexander de Moraes, who is leading the investigation of fake news. Jair Bolsonaro said on Avenida Paulista that he “will no longer obey” the decisions of the magistrate.

This Wednesday, the Chairman of the Chamber of Deputies Arthur Lira (PP-AL) moderated the speech and said that there is no room for disagreement between the powers.

STF President, Minister Louis Fuchs, has taken a tougher stance. He stated that the Court would not accept threats to its independence and compliance with its decisions.

An atmosphere of fear has led Rodrigo Pacheco, President of the Federal Senate, to cancel all deliberative and House committee meetings scheduled for today and tomorrow. It is estimated that there is no political environment for voting on projects, regardless of whether they are of interest to the Planalto Palace or not.

The political climate could stop the privatization of Eletrobras

In addition to legal uncertainty and confusion in court orders, XP highlighted in their report Wednesday the difficulties posed by rising political tensions over reforms and privatization in Congress.

According to Fernando Ferreira and Jenny Lee, the reform agenda could face obstacles as parliamentary attention shifts to the institutional crisis.

“This will not be the first nor the last political crisis in Brazil. In this case, it is likely that the increased tension in the political climate will not disappear quickly, since there is still more than a year before the presidential elections, ”they wrote.

“In the near future, political tensions should continue to put pressure on Brazilian assets,” added XP experts.

A temporary measure allowing privatization of Eletrobras was sanctioned by President Jair Bolsonaro in July. However, the sale of control of a state-owned company must go through a long process before the next offer of shares (subsequent).

Last week, President of the National Bank for Economic and Social Development (BNDES) Gustavo Montesano extended the privatization deadline, which ran from the first two months of 2022 to the first half of the year.

With the rise of political tensions in the country Eletrobras the privatization may have to wait a bit.