Bloomberg News

Bovespa Futures Fall as China Slowdown Dims Brazil Export View

March 27, 2012

Bovespa-index futures fell, signaling the stock gauge may retreat from yesterday’s gain, as signs of a slowdown in China spurred concern that demand for Brazilian exports will falter.

Cia. Siderurgica Nacional SA (CSNA3), Brazil’s third-biggest steelmaker, may move after reporting fourth-quarter net income of 831.8 million reais ($456.8 million), which compares with the average estimate of 610.8 million reais in a Bloomberg survey of nine analysts. Vale SA (VALE5), the world’s largest iron-ore producer, may be active after it was raised to the equivalent of buy at Morgan Stanley.

Bovespa futures fell 0.4 percent to 66,785 at 9:26 a.m. in Sao Paulo. The real weakened 0.2 percent to 1.8202 per U.S. dollar.

Industrial companies in China posted their first January- February profit decline since 2009. Net income dropped 5.2 percent from a year earlier to 606 billion yuan ($96.1 billion), the National Bureau of Statistics said on its website yesterday.

“The main downside risk for the Bovespa is a deeper slowdown in China,” Renato Bandeira de Mello, head of equity trading at Futura Corretora, said by phone from Sao Paulo. “The Bovespa depends heavily on China, which is a big export market for many listed companies.”

Brazil’s benchmark equity measure has advanced 17 percent this year, heading to its biggest quarterly gain since the period ended September 2009. Stocks have been buoyed by interest-rate cuts in Latin America’s largest economy, signs of growth in the U.S. and speculation Europe may be closer to solving its debt crisis.

The Bovespa trades at 10.8 times analysts’ earnings estimates, which compares with a 10.6 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 5.29 billion reais in stocks in Sao Paulo yesterday, data compiled by Bloomberg show. That compares with a daily average of 7.19 billion reais this year through March 16, according to data from the exchange.

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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