Bloomberg News

Bovespa Falls Second Day as Braskem Follows Commodities’ Decline

January 31, 2012

Jan. 30 (Bloomberg) -- The Bovespa stock index fell for a second day as raw material producers followed commodities prices lower amid renewed concern that Europe’s debt crisis will damp global growth.

Petrochemicals maker Braskem SA led declines by producers and oil company Petroleo Brasileiro SA sank to a one-week low as crude fell. Banks Banco Bradesco SA and Itau Unibanco Holding SA slumped after each was cut to “neutral” from “overweight” at JPMorgan Chase & Co.

The Bovespa index slid 0.2 percent to 62,770.01 at the close of trading in Sao Paulo, the most since Jan. 13. Thirty- eight stocks dropped on the gauge, while 31 gained. The real weakened 0.7 percent to 1.7488 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials fell 0.7 percent.

European leaders won’t finalize Greece’s second aid program today because talks with banks over debt reduction aren’t completed, German Chancellor Angela Merkel said. Greek Finance Minister Evangelos Venizelos rejected reports of plans to appoint a commissioner, citing “national dignity.”

“Again the focus is on Greece, and we’ll keep talking about this same issue over and over until some solution comes up,” Fausto Gouveia, who helps manage about 250 million reais ($143 million) at Legan Administracao de Recursos, said by phone from Sao Paulo. “Stocks linked to commodities end up suffering the most with all this uncertainty.”

Oil dropped for a second day, while the Bloomberg Base Metals 3-Month Price Commodity Index retreated 1.2 percent.

Petrobras fell 0.4 percent to 24.57 reais. Braskem slid 2.8 percent to 15.46 reais.

Steelmakers followed metals lower. Cia. Siderurgica Nacional SA dropped 1.4 percent to 18.04 reais, and Gerdau SA declined 0.7 percent to 16.74 reais.

Bradesco, Itau Sink

Bradesco sank 1.6 percent to 32.42 reais. Itau declined 1.7 percent to 35.50 reais. Investors should move out of these stocks into smaller banks including Banco do Estado do Rio Grande do Sul SA, JPMorgan’s analysts including Saul Martinez wrote in a note to clients, citing valuation. Banrisul, as Banco do Estado is known, trades at 9.3 times analysts’ earnings estimates, cheaper than the ratio of 11.1 times for Bradesco, data compiled by Bloomberg show.

Banrisul rose 1.2 percent to 20.55 reais, the second-best performer today on the MSCI Brazil/Financials index.

Brazil Inflation

Brazil’s broadest price index rose less than economists forecast in January. The IGP-M index of wholesale, construction and consumer prices climbed 0.25 percent from December, the Getulio Vargas Foundation said on its website today. The median estimate of 29 analysts surveyed by Bloomberg was for an increase of 0.30 percent.

The Bovespa has advanced 11 percent this year, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10 times analysts’ earnings estimates, in line with the ratio for the MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show. Brazil’s benchmark equity gauge sank 18 percent in 2011.

Traders moved 6.07 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 6.49 billion reais in 2011, according to data from the exchange.

--Editors: Brendan Walsh, 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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