Bloomberg News

Bovespa Falls as Usiminas Leads Steelmakers Lower; Vale Slumps

November 30, 2011

Nov. 29 (Bloomberg) -- The Bovespa index retreated from the biggest gain in two weeks as Usinas Siderurgicas de Minas Gerais SA led a rout for steelmakers on speculation minority investors won’t benefit from the Techint Group’s stake purchase.

Usiminas, as Brazil’s second-biggest steelmaker is known, and Cia. Siderurgica Nacional SA, which had been buying shares in its rival before the deal was announced, both slumped more than 4 percent. Vale SA, the world’s largest iron-ore producer, contributed most to the index’s drop after Barclays Plc cut its share-price forecast.

The Bovespa slipped 1.3 percent to 55,299.76 at the close in Sao Paulo. Forty-nine stocks dropped on the index while 19 rose. The real strengthened 0.5 percent to 1.8454 per dollar.

“Steelmakers are being dragged down by Usiminas,” said Joao Pedro Brugger, who helps oversee 80 million reais ($43.3 million) at Leme Investimentos in Florianopolis, Brazil. “The market is not very confident on yesterday’s gains. With the world growing slower, Vale ends up being impacted.”

Techint, through its Ternium SA and Tenaris SA units, agreed to buy a 27.7 percent voting stake in Usiminas from Camargo Correa SA, Grupo Votorantim and Usiminas’s workers pension fund, according to a Nov. 27 statement. Ternium and Tenaris join Nippon Steel Corp. in the controlling group, thwarting takeover efforts by rival CSN, according to HSBC Holdings Plc analyst Jonathan Brandt.

Shareholder Uncertainty

“It is not clear that there will be tag-along rights,” Raphael Biderman, an analyst at Banco Bradesco SA, said in a note to clients, referring to the outlook that an offer for control would be extended to minority shareholders. “Theoretically, there is a new shareholder in the control group, but not a full change in the control group. Therefore, we are not sure.”

Usiminas slipped 6.3 percent to 10.21 reais while CSN declined 4.1 percent to 14.17 reais.

Vale lost 1.6 percent to 38.85 reais. Barclays cut its forecast for the American depositary receipts by 8 percent after the miner presented its investment plan for next year, according to a note to clients.

Brazil’s monthly inflation, as measured by the IGP-M price index, slowed less than economists expected in November, as price increases for agricultural products and food sped up. Brazil’s broadest inflation measure climbed 0.5 percent, compared with a 0.53 increase in October. Economists expected inflation of 0.46 percent, the median estimate from 38 analysts surveyed by Bloomberg.

Bull Market

Brazil’s benchmark equity gauge jumped yesterday as commodities rose on speculation European leaders are intensifying efforts to contain the region’s debt crisis.

The Bovespa entered a bull market in October after gaining 22 percent from a two-year low on Aug. 8 as Brazil’s interest- rate cuts and speculation Europe was working toward solving its debt crisis buoyed demand for equities. Since then, the index has pared its advance to 14 percent.

Brazil’s benchmark stock gauge trades at 9.9 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 5.9 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average this year of 6.52 billion reais through Nov. 24, according to data from the exchange.

--Editor: Marie-France Han, Glenn J. Kalinoski

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 papadopoulos@bloomberg.net


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