Bloomberg News

Bovespa Falls Third Day as Rate Concern Outweighs Retail Sales

September 13, 2011

Sept. 13 (Bloomberg) -- The Bovespa stock index fell for a third day as prospects for further interest-rate cuts diminished after Brazil’s retail sales rose more than analysts forecast.

Lojas Renner SA and BR Malls Participacoes SA led declines for companies that depend on domestic demand as traders drove up yields on interest-rate futures. Itau Unibanco Holding SA led a slump for banks. Losses were partially offset as B2W Cia. Global do Varejo, a Brazilian online retailer, soared after its parent decided to sell bonds, while OGX Petroleo & Gas Participacoes SA followed crude higher.

The Bovespa declined 0.3 percent to 55,543.97 at the 4:15 p.m. New York time close. Forty-three stocks dropped on the index while 22 rose. The real weakened 0.5 percent to 1.7118 per dollar.

“Retailers and banks have been suffering because the inflation question is getting worse,” said Marcello Paixao, a money manager at Sao Paulo-based hedge fund Principia Asset Management. “It’s hard to know what to expect from the central bank as it isn’t managing to indicate clearly to the market what it’s doing.”

Brazil’s retail sales rose 1.4 percent in July from the previous month, the national statistics agency said today. That’s the largest increase this year and compares to a median projection for a 1 percent increase among 32 economists surveyed by Bloomberg.

The yield on the interest-rate futures due in January 2013 jumped 12 basis points, or 0.12 percentage point, to 10.73 percent.

Shopping Malls

Lojas Renner SA, Brazil’s biggest publicly traded clothing retailer, sank 6 percent to 56.87 reais while BR Malls, Brazil’s biggest owner of shopping malls, dropped 4.6 percent to 19.41 reais. Itau, Latin America’s biggest bank by market value, dropped 1 percent to 28.02 reais.

B2W jumped 9.6 percent to 17.72 reais. Parent Lojas Americanas SA advanced 3.6 percent to 16.15 reais after deciding to issue as much as 500 million reais ($292 million) of local bonds maturing in seven years.

“Investors are expecting that either Lojas Americanas will use part of the proceeds from the bond sale to inject more money in B2W, or B2W itself will follow suit and go to the market to raise some money,” Julia Monteiro, an analyst at Ativa Corretora, said in a telephone interview from Rio de Janeiro. “Most of B2W sales are on credit, so they have high financing needs. It’d be better if they can get longer-term loans.”

Crude Climbs

OGX, controlled by billionaire Eike Batista, gained 1.5 percent to 11.03 reais after crude rose above $90 a barrel in New York.

The Bovespa entered a bear market on July 27 after plunging 20 percent from its bull-market peak in November. The measure extended that drop to 24 percent through yesterday and trades at 9.5 times analysts’ earnings estimates, according to weekly data compiled by Bloomberg. That compares to a ratio of 11.5 for the Shanghai Composite Index, 5.7 for Russia’s Micex and 14.2 for India’s Sensex.

Traders moved 5.34 billion reais in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares to a daily average this year of 6.55 billion reais through Sept. 6, according to data from the exchange.

--Editors: Marie-France Han, Brendan Walsh

To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulous@bloomberg.net


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