Billionaire Esteves Warns of Severe Downturn and Leverage Danger

(Bloomberg) -- Andre Esteves is taking a page out of his trader years to dole out advice on how to survive the crisis roiling markets.

The billionaire founder of Banco BTG Pactual SA predicted the economic downturn coming after the coronavirus pandemic will be worse than many expect and may cause stock markets to fall further. Investors and companies should avoid excessive leverage and currency mismatches, he said.

“The good investor, the long-term winner, has to know what is the right kind of animal to hunt in the forest,” Esteves said on Friday on a broadcast hosted by BTG. “Now is not the time to go after big game.”

The global pandemic has routed equity and credit markets, even as central banks and governments take unprecedented measures to blunt the economic fallout. Brazil has been especially hard hit with the benchmark Ibovespa index down almost 55% this year in dollar terms. The nation’s central bank cut interest rates to an record low 3.5%, even as President Jair Bolsonaro takes a relaxed approach to combating the virus.

Esteves anticipates Brazil’s currency, which ranks among the world’s worst after declining 25% this year, to further weaken. He also said that the central bank should stop cutting rates.

Esteves began his career as a computer technician at Banco Pactual, BTG’s predecessor, in 1989. He later moved to the trading desk and the fixed-income team, where he worked with legendary trader Andre Jakurski and Brazil’s current economy minister Paulo Guedes.

“We’re still not at the time to go looking for opportunities, but to be conservative, carrying a simpler portfolio,” Esteves said.

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