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Shares of Brazilian electric utilities plunge a day after the country announced a major cut in...

Shares of Brazilian electric utilities plunge a day after the country announced a major cut in electricity taxes that will lower energy costs for industries and consumers. UBS says the “stock-price declines on regulatory noise seem exaggerated,” presenting buying opportunities. CIG -20.8%, ELP -8.9%, EBR -7.9%, CPL -3.7%.
Comments (3)
  • GaltMachine
    , contributor
    Comments (1139) | Send Message
     
    I think they call that Legislative Risk. Wow!

     

    However, I don't quite understand why lowering taxes on electricity negatively impacts the producers. You would think it would do the opposite unless they keep a portion of the taxes collected.
    12 Sep 2012, 03:15 PM Reply Like
  • Olswki
    , contributor
    Comment (1) | Send Message
     
    The tax lowering will give less than 50% of the energy prices cut. The rest of it will be through a comprehensive contract re-negotiation that govern is imposing.
    14 Sep 2012, 04:20 AM Reply Like
  • vireoman
    , contributor
    Comments (908) | Send Message
     
    This article helps explain:

     

    http://on-msn.com/UbETow
    14 Sep 2012, 07:20 PM Reply Like
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