Brazilian Stocks Drop on Quickening Inflation, Korea Conflict
Brazil’s Bovespa stock index fell, capping the biggest two-day drop since June, as North Korea fired artillery shells into South Korea and quickening inflation raised speculation policy makers will increase borrowing costs.
MRV Engenharia e Participacoes SA and PDG Realty SA Empreendimentos & Participacoes led a tumble for homebuilders after mid-month consumer prices rose more than expected. MMX Mineracao e Metalicos SA, the iron ore company controlled by billionaire Eike Batista, sank 5.2 percent as metals prices fell. Telemar Participacoes SA dropped after saying BNDES Participacoes SA sold 396 million of its common shares in the company, equivalent to 14.5 percent of that share class.
“Europe’s debt was already worrying, and now there’s the conflict in Korea to top it off,” said Joao Pedro Brugger, who helps oversee 60 million reais ($34.6 million) at Leme Investimentos in Florianopolis, Brazil. “The market is in a really bad mood today.”
The Bovespa fell 2.4 percent to 67,952.55. It declined 1.8 percent yesterday, for the biggest two-day drop since June 30. All but four stocks fell on the 67-company index. The BM&FBovespa Small Cap index slipped 1.8 percent to 1,387.70. The real fell 0.8 percent to 1.7357 per dollar.
Inflation
Inflation, as measured by the IPCA-15 price index, quickened to 0.86 percent in the month through mid-November from the same period a month earlier, the fastest pace in nine months, the national statistic agency said today. Economists forecast a 0.72 percent gain, according to the median estimate in a Bloomberg survey of 33 analysts.
Homebuilders sank as the yield on the interest-rate futures contract due in January 2012 increased 6 basis points to 11.83 percent, the highest level since July 12.
MRV dropped 5.4 percent to 16.23 reais. PDG declined 5.5 percent to 10.07 reais. Brookfield Incorporacoes SA sank 4.3 percent to 8.18 reais.
U.S. and European stocks sank on escalating concern Ireland’s debt crisis will spread, and an escalating conflict in Asia could halt the economic recovery.
North Korea sent “several” artillery shells into South Korea near the two nations’ western border, South Korea’s Joint Chiefs of Staff said in a statement. South Korea returned fire with 80 shells and scrambled fighter jets as President Lee Myung Bak vowed to respond “sternly.”
MMX declined 5.2 percent to 12.69 reais. Vale SA, the world’s biggest iron ore producer, retreated 2.2 percent to 48.20 reais. Metals prices on the Bloomberg Base Metals Spot Price Commodity Index fell 1.4 percent.
Telemar Norte Leste, Brazil’s biggest fixed-line phone company, retreated 2 percent to 46.60 reais. Brazil’s Funcef pension fund bought 197.3 million common shares, more than 5 percent of Telemar’s capital. The Petros pension fund also bought 198.7 million common shares, and now owns more than 5 percent, according to two other regulatory filings.
To contact the reporters on this story: Camila Russo in New York at Crusso15@bloomberg.net; Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net
To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net
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