Bloomberg News

Bovespa Falls a Fourth Day as Financials Drop on Growth Concern

November 23, 2011

Nov. 22 (Bloomberg) -- The Bovespa stock index fell for a fourth day, the longest losing streak in two months, as financial stocks declined after Germany rejected calls to do more to counter market turmoil.

Banco Santander Brasil SA plunged, extending its five-day decline to 13 percent, spurred by plans by its controlling shareholder to sell a stake. PDG Realty SA Empreendimentos & Participacoes, Brazil’s biggest homebuilder by revenue, sank to the lowest level in more than a month. Losses on the Bovespa were limited as OGX Petroleo & Gas Participacoes SA followed crude prices higher. The benchmark gauge fell 0.7 percent to 55,878.44 at the close of Sao Paulo trading.

Concern heightened that Brazilian economic growth may slow after Germany added to speculation the European debt crisis will spread and a report showed the U.S. economy grew less than previously estimated in the third quarter. Fifty stocks tumbled on the Bovespa, while 16 gained.

“We still haven’t seen the worst part of the European crisis,” Rogerio Freitas, a partner at Rio de Janeiro-based hedge fund Teorica Investimentos, said by phone. “People in Brazil read in the newspapers about a global crisis and decide to postpone the purchase of a new car, or think about not taking new loans. This is how the global turmoil is affecting the economy.”

Brazil’s current account deficit widened to $3.1 billion in October, from $2.2 billion in September, the central bank said today. Brazilian inflation peaked in the third quarter of this year and will slow to 4.5 percent by the end of 2012, central bank Director for Economic Policy Carlos Hamilton said in Belo Horizonte today. The real weakened for a sixth day.

Europe Debt

Germany is standing pat in Europe’s debt crisis, rejecting calls from allies and investors to do more to counter market turmoil, said Michael Meister, a senior lawmaker in Chancellor Angela Merkel’s coalition.

“We don’t have any new bazooka to pull out of the bag,” Meister, the Christian Democratic bloc’s finance spokesman and deputy leader in parliament, said in Berlin. “We see no alternative to the policy we are following,” which calls for budget cuts and keeping the European Central Bank from becoming a lender of last resort, he said in a telephone interview.

Financial stocks fell the most among eight industry groups in Brazil tracked by Bloomberg.

Santander Brasil sank 6.1 percent to a record-low 12.84 reais. Madrid-based Banco Santander, the biggest bank in the euro zone by market value, has announced sales of stakes in its Brazilian bank and U.S. auto-loans unit as well as the Chilean business as it strives to plug a 5.22 billion-euro ($7.1 billion) capital shortfall identified by European banking regulators.

PDG Realty, Brazil’s biggest homebuilder by revenue, declined 4.4 percent to 6.26 reais.

OGX Gains

OGX climbed 1.8 percent to 14.03 reais. Oil rose for the first time in four days as new sanctions against Iran raised concern that supplies will be disrupted.

The Bovespa entered a bull market in October after gaining 22 percent from a two-year low on Aug. 8 as cheap valuations and declining interest rates lured investors amid improving prospects for a solution to Europe’s debt crisis. Since then the index has pared its advance to 15 percent.

Brazil’s benchmark equity gauge trades at 10.2 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s gauge of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 5.62 billion reais ($3.09 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average this year of 6.54 billion reais through Nov. 21, according to data from the exchange.

--Editors: Laura Zelenko, Marie-France Han

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

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


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