Companies that are worth a GDP
Valor Econômico - 02/18/2008
What seemed impossible in the beginning of this decade starts becoming reality. The market value of the publicly-held companies listed in the São Paulo Stock Exchange (Bovespa) may practically become equal to the Gross Domestic Product (GDP) of the Brazilian economy in 2007. In the end of December, the 448 listed companies together were worth R$ 2.48 trillion (US$ 1.41 trillion) in the evaluation of the market. The GDP, on its turn, whose official data will be known on March 12th, is estimated between R$ 2.5 trillion (US$ 1.42 trillion) and R$ 2.6 trillion (US$ 1.47 trillion). Between 2002 and 2003, the market value of the companies represented only 30% of the GDP, a discouraging panorama if compared to the most developed countries, in which the index generally exceeds 100%. After 2004, with the capital market presenting its vital signs again after a long winter, the context started reverting and in the end of 2006, the open companies were already equivalent to almost 70% of the GDP. According to the economists heard by Valor, the index of market value versus the GDP presents not only the level of development of the local capital market, but also the dynamics of the economic activity, mainly for investment, once an inactive capital market means one less source of fund raising for the companies to invest in their expansion projects. The market value grew 60% in 2007, not only because the companies had good performance, with favorable internal and external scenarios, but also pushed up by 64 companies that went public and decided for their listing in the exchange market.