October 23^rd – 24^th

Ibovespa:
-8.2%
-3.0%

Hong Kong Stock Exchange fell more than 10%. In Brazil, trading with Telebrás stocks (the main blue chip) was suspended in the morning because of the official disclosure of its privatization model. As a result, fund managers hedged heavily selling index futures. São Paulo Stock Exchange suffered the second largest loss in world markets. The next day, rumours were heard of an speculative attack on the Venezuelan currency.

Brazilian markets opened under the influence of another fall in Hong Kong (down 5.8%), echoed in Asian and European markets. In the United States, the New York Stock Exchange (NYSE) circuit breaker worked twice; by the end of the day the Dow Jones Industrial Average had fallen 554 points, its worst result since the crash of 1987. The main Latin American stock exchanges followed the lead: Argentina and Mexico each plunged more than 13%, while the Brazilian Ibovespa suffered its fourth greatest loss ever and the largest in seven years.

October 28^th

Ibovespa:
+6.4%

Hong Kong stock exchange closed with a loss of 14%. In Brazil, regulatory countermeasures were agreed upon between the exchanges and the Brazilian Securities Commission (CVM). The functioning of the main exchanges (Rio and São Paulo) was synchronized with that of the NYSE, from 12:30 pm to 6:30 pm local time. Also, a circuit-breaker was established for the first time, both in São Paulo Stock Exchange and the Brazilian Futures Exchange (BM&F). When the exchanges opened, Ibovespa fell more than 10% in only four minutes, activating the 1-hour circuit-breaker. The whole day was marked by extreme volatility, with an intraday range of nearly 20%. The pronouncement by the President of the United States temporarily calmed down the markets.

October 29^th

Ibovespa:
-6.0%

Rumours of difficulties in the financial sector due to tough margins calls began to spread early in the morning. Another wave of selling was triggered by the liquidity squeeze caused by higher margin calls, mark-to-market of futures contracts and the public withdrawals from equity funds. Adjustments in the regulatory measures were made.

Ibovespa:
-9.8%
+1.5%

After the close of the markets, the Monetary Policy Committee, in an extraordinary meeting, doubled the Central Bank basic interest rate (TBC), in an attempt to stop the capital flight in the forex markets. The decision was interpreted as evidence of the government’s determination to shield the currency and keep speculators at bay. On October 30^th, BM&F released a press communiqué saying that all margin requirements and contracts markings-to-market had been met, in volumes amounting to more than US$ 1.8 billion. The communiqué also asserted that there had been no compulsory liquidation of futures contracts and no communication of defaulting clients by brokerage houses.

Ibovespa:
+9.7%
+4.0%
-2.6%
-5.5%

The rise was less a signal of an overall change of scenario than an indication of the persistence of high volatility. BM&F increased the daily trading range of Ibovespa futures contracts from 10% to 15%. Positive determinants included the privatization auction of CPFL (the energy state company of São Paulo) on November 5^th, and announced share buybacks by some corporations. CPFL was sold 70% above the minimum price set.

November 7^th

Ibovespa:
-6.4%

After dipping more than 10% during the day, Ibovespa closed -6.4%. Late afternoon the circuit-breakers of both Rio and São Paulo stock exchanges were activated, halting trading for 30 minutes. BM&F released another press communiqué, similar in contents to the one of October 31^st.

Ibovespa:
+2.0%
-3.3%

Before trading began on Monday, the government announced a set of 51 measures of fiscal policy, aiming at the foreseen increase in public debt due to the interest rate rise.

November 12^th

Ibovespa:
-10.2%

World markets were down and the negative flow of Brazilian foreign exchange reserves persisted. Circuit-breakers were activated for the third time since the beginning of the crisis and Ibovespa closed the day with another deep fall. Rio de Janeiro Stock Exchange (BVRJ) narrowed the limits of its circuit breaker.

November 13^th

Ibovespa:
+3.2%

In a clear reaction to the previous day’s loss, authorities announced a set of concerted measures. CVM raised the maximum limit of share buybacks, while the Central Bank lowered the minimum term for bond issues in foreign markets.

November 14^th

Ibovespa:
+8.2%

Many factors concurred to raise the index. Asian markets emitted positive signals. Telebrás ADRs were high in the OTC New York market. Bargain hunters began to prey for cheap stocks in Brazilian exchanges. At the end of the day, BM&F released a third communiqué not different from the previous ones, indicating no liquidation stress in the futures markets. Still on that day, the Central Bank disclosed the total loss of foreign currency reserves during the last week of October: US$ 8.3 billion.