Bloomberg News

Most Brazilian Stocks Decline as OGX Follows Commodities Lower

February 03, 2012

Feb. 2 (Bloomberg) -- Most Brazilian stocks fell as raw material producers including OGX Petroleo & Gas Participacoes SA followed commodities prices lower.

OGX, the oil company controlled by billionaire Eike Batista, and state-run Petroleo Brasileiro SA declined as crude fell to a six-week low. Gafisa SA, Brazil’s third-bigger homebuilder by revenue, gained after saying in a regulatory filing that it’s studying an acquisition offer from billionaire investor Sam Zell and GP Investments Ltd.

The Bovespa was little changed at 64,593.10 at the close of trading in Sao Paulo after earlier falling as much as 0.5 percent. Thirty-eight stocks dropped on the index while 30 gained. The real strengthened 0.9 percent to 1.7189 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials declined 0.3 percent.

“Despite a good start to the year, stocks linked to commodities are a more dangerous bet as their performance will always be subject to changes in the external outlook,” Renato Bandeira de Mello, head of equity trading at Futura Corretora, said by phone from Sao Paulo.

OGX declined 2.6 percent to 17.03 reais. Petrobras, as Petroleo Brasileiro is known, sank 1.7 percent to 24.53 reais.

Gafisa gained 5.9 percent to 5.35 reais. The stock posted its biggest three-day gain since May 2009, rising 19 percent.

Gafisa said in a regulatory filing today it’s in talks with Zell and GP Investments, a Brazilian private-equity firm.

GP declined to comment, according to an e-mailed statement sent by an external press officer in Rio de Janeiro. Allison Davis, a spokeswoman for Equity International, the fund Zell co- founded in 1999, also declined to comment.

Redecard Earnings

Redecard SA, Brazil’s second-biggest card-payment processor by market value, climbed 1.9 percent to 32 reais after reporting net income rose 31 percent from a year earlier. The company said adjusted net income, which excludes some items, increased to 456.9 million reais ($265.8 million), from 348.7 million reais a year earlier, according to a regulatory filing. That was more than the 402 million reais mean estimate of 11 analysts surveyed by Bloomberg.

Hypermarcas SA, the maker of more than 180 consumer products, advanced 3.6 percent to 11.22 reais on signs policy makers will keep cutting the benchmark lending rate.

“We have signaled that the monetary easing cycle has not finished,” central bank President Alexandre Tombini told reporters today in Mumbai. “We are in a different environment today than we were at the start of 2011, so we have some room to reduce rates.”

Interest-Rate Outlook

In the interest-rate futures market, yields on most contracts fell. The yield on the contract due in January 2014, the most traded today, dropped five basis points, or 0.05 percentage point, to 9.88 percent. The central bank has cut the benchmark rate 200 basis points since August to 10.5 percent.

The Bovespa has advanced 14 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 MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Foreign investors poured 7.17 billion reais into Latin America’s largest equity market in January, according to data compiled by Bloomberg. They pulled 1.35 billion reais from the Bovespa in 2011.

Traders moved 8.08 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 6.17 billion reais this year through Jan. 30, according to data from the exchange.

--Editors: Glenn J. Kalinoski, David Papadopoulos

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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