InBev shares bounce again after government’s support for real

Shares of Belgian brewer InBev rebounded dramatically on 23 October 2008 from steep declines after the Brazilian government pledged support for propping up the country’s currency, real.

In the first half of 2008, AmBev’s beer business in Brazil contributed nearly 50 percent to InBev’s core, pre-tax earnings. The falling value of the real in recent weeks has weighed on InBev’s share price because the company must convert its Brazilian sales into euro-denominated profits, resulting in major losses if the real weakens significantly.

InBev’s shares fell 13 percent on 22 October and over 7 percent on 23 October before surging after the Brazilian government’s announcement.

Financial market turmoil in Latin America has sent the shares of InBev plummeting, analysts say. But InBev was not alone. Other beverage companies received a beating too. SABMiller was down 4 percent as was the stock of Dutch brewer Heineken during the penultimate week of October 2008.