Bloomberg News

Most Brazilian Stocks Fall as Rossi Declines on Rate Outlook

February 07, 2012

Feb. 6 (Bloomberg) -- Most Brazilian stocks fell as homebuilder Rossi Residencial SA led declines by companies that depend on credit growth as economists increased their 2013 year- end interest rate forecast for a second straight week.

Rossi fell the most in a week, and the MSCI Brazil/Consumer Staples index was the worst performer among 10 industry groups. Oil company OGX Petroleo & Gas Participacoes SA and petrochemicals producer Braskem SA fell as crude declined.

The Bovespa, Brazil’s benchmark equity index, was little changed at 65,223.72 at the close of trading in Sao Paulo. Forty stocks tumbled on the gauge, while 27 rose. The real weakened 0.5 percent to 1.7257 per U.S. dollar.

The benchmark Selic rate will end 2013 at 10.75 percent, according to the median forecast in a Feb. 3 central bank survey of about 100 economists published today, up from an estimate of 10.38 percent the previous week. In Mumbai last week, central bank President Alexandre Tombini said Latin America’s biggest economy still has “some room” to cut rates from their current level of 10.5 percent.

“Despite some statements from government officials we’ve seen lately, when you look at the state of the economy, you get a bit suspicious about how much further rates can fall,” said Alfredo Barbutti, an economist at Liquidez DTVM Ltda in Sao Paulo. “The economy is showing signs of recovery, which reduces the need of more rate cuts.”

In the interest-rate futures market, yields on most contracts advanced. Yields on the contract due in January 2014 rose three basis points, or 0.03 percentage point, to 9.98 percent.

Rossi fell 2.3 percent to 10.54 reais.

Commodities Drop

The Bovespa earlier fell as much 0.7 percent as lower commodities pushed raw material producers down. OGX, the oil company controlled by billionaire Eike Batista, slid 0.2 percent to 17.26 reais. Braskem dropped 1.3 percent to 15.54 reais. Crude for March delivery sank as much as 1.5 percent.

HRT Participacoes em Petroleo SA rose 2.1 percent to 472.01 reais, defying the rout in most commodities producers, after an oil and gas discovery made by Petroleo Brasileiro SA in the Amazon spurred speculation HRT may have similar findings in blocks owned in the Solimoes Basin.

“The 21 blocks owned by HRT surround Petrobras’ blocks in the basin, and this new discovery reinforces the potential of HRT’s portfolio,” Bradesco Corretora’s analysts including Auro Rozenbaum wrote in a note to clients.

Lupatech SA, Brazil’s biggest provider of oil equipment and services, surged 12 percent to 5 reais. The company’s board approved a 10 million reais ($5.8 million) credit line from Banco Votorantim that will be paid in 105 days, according to a regulatory filing from Lupatech.

Relative Value

The Bovespa has advanced 15 percent this year, after slumping 18 percent in 2011, 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 10.4 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 5.14 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 6.53 billion reais this year through Feb. 3, according to data from the exchange.

--Editors: Richard Richtmyer, Glenn J. Kalinoski

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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