Brazil's Bovespa Stock Index Declines on Petrobras, Inflation Concern
Brazil’s Bovespa stock index fell the most in two weeks, led by Petroleo Brasileiro SA, as commodities slumped and inflation expectations rose.
Petrobras tumbled the most in almost seven months after crude declined and a report said the state oil company may have to pay more than previously estimated for government reserves. Fibria Celulose SA, the world’s largest pulp producer, fell 4.5 percent. Gafisa SA led real-estate declines on speculation quickening inflation will spur policy makers to raise interest rates. Redecard SA, Brazil’s second-biggest card-payment processor, declined the most in three weeks.
The Bovespa slid 2 percent, the most since Aug. 11, to 64,260.79 at 4 p.m. New York time. Fifty-seven stocks fell while seven gained. The real weakened 0.4 percent to 1.7562 per dollar.
“It’s more of the same: fear about global growth and commodities weak again,” said Mirela Rappaport, who manages 150 million reais ($85.4 million) at Investport in Sao Paulo. “There’s a certain ill humor.”
The Bovespa rose the most in three months on Aug. 27, paring last week’s drop, as an increase in commodity prices buoyed producers and the U.S. economy expanded faster than analysts estimated. A report today showing lower-than-forecast growth in U.S. personal incomes added to concern the economic rebound is slowing, helping crude drop in New York for the first time in four days. The U.S. is Brazil’s second-biggest trade partner.
Economists raised their 12-month Brazil inflation forecast for the first time in three weeks, to 4.99 percent from 4.97 percent previously, according to the central bank survey published today.
Brazilian wholesale prices rose more than expected in August, also adding to pressure on policy makers to resume rate increases next year. Brazil’s IGP-M price index, the country’s broadest measure of inflation, increased 0.77 percent in August, led by rises in iron ore and soy prices, the Getulio Vargas foundation said on its website. The increase was higher than the median 0.67 percent forecast of 27 economists surveyed by Bloomberg. The index rose 0.15 percent in July.
Petrobras Exchange
Brazil’s President Luiz Inacio Lula da Silva wants to set a price of about $10 per barrel for oil reserves the government plans to exchange for new Petrobras stock, Folha de S. Paulo reported. Lula thinks a price of $8.50 per barrel would be too cheap, the Sao Paulo-based newspaper said, citing an unidentified presidential aide.
“This is bad for Petrobras shareholders,” said Rappaport. “The market would like something closer to $6 or $7. It looks like it’ll be something between $8 and $10.”
Finance Minister Guido Mantega said today the government and Petrobras remain in talks and all news reports on the price of reserves are based on speculation.
Petrobras fell 4.2 percent, the most since Feb. 4, to 25.45 reais while Fibria tumbled to 26.51 reais. Gafisa slid 2.8 percent to 11.77 reais, pushing the BM&FBovespa Real Estate Index down 2.1 percent. Redecard lost 2.1 percent to 24.38 reais for the biggest slide since Aug. 9.
The Bovespa index trades for 12.5 times analysts’ 2010 earnings estimates, compared with 11.8 times for the MSCI Emerging Markets Index of 21 developing nations’ stocks and 15.4 times for Mexico’s IPC index, according to weekly data compiled by Bloomberg. The Bovespa trades at 14.4 times the reported profits of its companies after fetching 25.5 times in November, the most in almost six years, weekly data show.
To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net
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