Jan. 30 (Bloomberg) -- Banco Bradesco SA and Itau Unibanco Holding SA, Brazil’s largest private banks, declined after JPMorgan Chase & Co. scrapped an “overweight” rating on the stocks.
Bradesco fell 2.5 percent to 32.12 reais at 1:21 p.m in Sao Paulo, while Itau lost 2.8 percent, the most since Nov. 17, to 35.11 reais. The MSCI Brazil/Financials Index was down 2.6 percent, the worst performance among 10 industry groups.
The banks were cut to “neutral” from “overweight” by JPMorgan equity analyst Saul Martinez, according to a note sent to clients today. “Investors should rotate out of these stocks” and select Banco do Brasil SA and smaller banks such as Banco do Estado do Rio Grande do Sul SA, he wrote in the note. “The ample valuation rerating story for Itau and Bradesco has mostly run its course.”
Brazil’s central bank has cut borrowing costs for four straight meetings since Aug. 31 to stimulate growth in the world’s sixth-largest economy. Since then, Bradesco gained 14 percent while Itau was up 22 percent.
Banco do Brasil dropped 0.6 percent today to 26.88 reais, and has gained 0.6 percent since the central bank began its monetary easing cycle.
--With assistance from Ney Hayashi in Sao Paulo. Editors: Glenn J. Kalinoski, Richard Richtmyer
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