TOP WIKIFOLIO TRADE
High-risk speculation on shift in Brazilian politics About the Brazilian companies: These are speculations on a change in government and policy. - US20441B4077 - Companhia Paranaense de Energia (mostly hydro, the company reports 93% of their generated electricity to be from clean energy sources) - US2044096012 - Companhia Energetica de Minas Gerais (mostly hydro) Brazil has an extremely high potential for renewable energy, as almost no other country in the world. This has three building blocks: - There are many regions with very strong solar radiation, which are very well suited for PV. - Brazil also has an extremely high potential for hydro energy, due to the most water-rich rivers in the world, such as the Rio Paraná and the Amazon. - In addition, there are coastal regions with a lot of constant wind, which offers additional potential for wind energy. Currently, Brazil still relies heavily on its oil resources and fossil fuels, on which the energy system is based. However, there seems to be little future in this, given the global development of political goals, changes in demand and the shift of investors' capital. Brazil will have to see a big change here as well. The Petrobras Group, which still plays a very central role in politics and regulation, is a good example of this. In 2010 it was still one of the 4 largest companies in the world, by market cap. So far, they have lost 2/3 of their value, even though supported by the current government. The current government of Jair Bolsonaro plays down climate change, despises environmental organisations and supports fossil fuels and the cutting down of the Amazon rainforest. His reputation has suffered because of his miserable handling of the Covid-19 situation, which is another reason why I don't think he will be re-elected. Under a new president, the political discourse could change radically and companies from the renewable energy sector could benefit massively - with a delay compared to the rest of the world. This is a risky speculation on political upswing towards the presidential elections in 2022, which is why there are only small positions in the portfolio. If renewable energies are installed on a large scale, the value of hydro plants will also increase, as they are dispatchable, can balance the system and can always generate electricity at the most favourable time in the market, e.g. if no solar or wind power is available.