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SÃO PAULO – Oil giant Petrobras lost nearly a fifth of its market value on Monday after Brazilian President Jair Bolsonaro appointed an army general to take over the company in an apparent attempt to control fuel prices, sparking a crisis of confidence as investors worsened his administration’s commitment to free trade policies.

Mr Bolsonaro’s plan to appoint General Joaquim Silva e Luna, who served alongside the president decades ago under the Brazilian military dictatorship, has been a blow to the oil producer. Petrobras – officially Petróleo Brasileiro SA – had spent the last few years trying to regain investor confidence and sell billions of dollars in assets following an excessive frenzy under previous administrations that nearly led the company to collapse. bankruptcy.

“Bolsonaro’s brash decision to replace Petrobras CEO with an army general is a red flag indicating a shift towards populist policies,” TS Lombard, an investment research firm, said on Monday in a note. to investors. The London-based company said the president’s plans indicated a shift towards the generous fuel price subsidies that have marked the left-wing government of Dilma Rousseff, which was removed from office in 2016.

Since Friday, Petrobras has lost nearly $ 20 billion in market value. The price of its preferred shares fell from 27.33 reais, or $ 5.00, at the close on Friday to 21.45 reais, or $ 3.92, at the close on Monday. The drop was the biggest drop in Petrobras shares since March 9 of last year, when oil prices fell at the start of the coronavirus pandemic.

As investors fled Brazilian assets on Monday, the country’s Bovespa stock index fell almost 5%, while the Brazilian currency lost more than 1% against the dollar. The prices of bonds linked to Petrobras also fell.

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