June 9, 2020 / 9:18 PM / a month ago

Brazil reopens more than half of all malls despite COVID-19 surge; shares jump

SAO PAULO (Reuters) - More than half of Brazilian malls have resumed activities with reduced opening hours, an industry group said on Tuesday, as authorities increasingly lift social distancing measures despite a growing number of coronavirus cases and deaths in Latin America’s largest market.

The pandemic led to the closure of all 577 Brazilian malls, forcing them to provide discounts and/or rental exemptions to struggling merchants while bolstering e-commerce and drive-thru deliveries to keep sales going.

But restrictions began to slip over the past few weeks even though COVID-19, the respiratory disease caused by the novel coronavirus, continues to sweep the country. According to data gathered by all state health departments, Brazil’s death toll now stands at 37,134, the world’s third highest after the United States and Britain.

Brazilian malls association Abrasce said 298 malls in 133 cities have already resumed operations and the number is likely to rise further in coming days as major state capitals prepare the reopening.

Sao Paulo, Brazil’s largest city and the epicenter of the outbreak, has already approved the sector’s proposed health measures and is expected to reopen its 53 malls by Thursday, before the Brazilian Valentine’s Day, which is celebrated on June 12.

Brazil’s No. 2 city Rio de Janeiro, which has 38 malls, has scheduled the reopening for June 17.

Shares of all major publicly traded mall groups in Brazil posted sharp gains on Tuesday, with Iguatemi (IGTA3.SA) and Multiplan (MULT3.SA) rising almost 5% to end among the biggest winners in Brazil's benchmark index Ibovespa .BVSP.

The sector is estimated to have lost about 35 billion reais ($7.17 billion) in sales since March 16, Abrasce’s President Glauco Humai told Reuters, adding mall operators have so far granted 3.5 billion reais in rent exemptions and discounts to merchants.

“These special policies and discounts for maintenance and advertisement fees are likely to remain in place until December depending on the city,” Humai said.

Still, Brazilian merchants association Alshop estimates that 15,000 of its 105,000 shopkeepers will not survive the coronavirus crisis. “We don’t expect to recover from this loss and sadly some smaller merchants will have to close for good,” Alshop President Nabil Sahyoun said.

Reporting by Gabriela Mello; Editing by Steve Orlofsky

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