Brazilian stocks declined for a fourth day, the longest losing streak in more than two months, on speculation China may take further measures to cool the economy and curb inflation in Brazil’s biggest trading partner.
Vale SA (VALE3), the world’s largest iron-ore producer whose top export market is China, fell as metals prices sank. Gerdau SA (GGBR4) plunged on a plan by raise as much as 5.5 billion reais ($3.5 billion) in the region’s biggest stock sale in almost seven months.
The Bovespa stock index slid 0.6 percent to 66,486.49 at the close of Sao Paulo trading at 4:15 p.m. New York time. The measure is down 3.9 percent in the past four trading session, a streak unmatched since Jan. 31. Thirty-six stocks rose on the index, while 30 fell. The real advanced 0.5 percent to 1.5871 per U.S. dollar.
“Investors are more cautious after the bad news we saw in the past few days,” Silvio Campos Neto, an analyst at Tendencias Consultoria Integrada, a Sao Paulo-based advisory firm, said in a telephone interview.
The Bovespa fell the most in two months yesterday after Japan said its nuclear crisis may exceed that of Chernobyl and oil capped the biggest two-day drop in almost a year.
Copper, a bellwether for global growth, slid the most in five weeks today on concern that China may take more steps to tighten credit in a fight against inflation, potentially slowing metal demand.
China will implement “prudent” monetary policy and ensure stable consumer prices, the State Council said in a statement. In March, the country’s copper imports fell 33 percent from a year earlier, customs data show.
Vale slid 1.1 percent to 45.92 reais.
Gerdau sold 68 million new common shares for 15.60 reais each and 134.8 million new preferred shares for 19.25 reais apiece, while existing investors sold 69 million preferred shares, according to regulatory filings yesterday. The Porto Alegre, Brazil-based company may issue an additional 10.2 million common shares and 20.4 million preferred shares in a supplementary offer.
The steelmaker’s preferred shares fell 2.4 percent to 18.91 reais, the lowest price since July 2009.
Brazilian steelmakers are bound to have lower profit margins as the country’s currency strengthens, said Will Landers, manager of BlackRock Inc.’s $1.06 billion Latin America Fund.
“Even if steel prices rise in the global market, this would be offset by real’s gains,” Landers said in an interview yesterday at Bloomberg’s office in Sao Paulo. “Current stock prices don’t reflect this scenario yet.”
Rossi Residencial SA, a Brazilian homebuilder, gained 1.3 percent to 14.12 reais, after saying contracted sales increased 20 percent in the first quarter from a year ago to 1.01 billion reais.
Santos Participacoes SA advanced 2.3 percent to 26.30 reais after earlier jumping 6.9 percent. The port operator was raised to “outperform” from “market perform” at Itau Securities.
Investors are piling into Brazilian port operators, counting on cargo backlogs and record shipping volumes to bolster profit. Exporters are facing shipping delays on rising demand for Brazil’s sugar, soybean and iron ore exports, while record imports augment revenue for ports.
“The demand is certainly there and shipping has huge growth potential,” said Andre Vainer, who helps manage 600 million reais as equity fund manager at Rio de Janeiro-based XP Investimentos.
The Bovespa is down 4.1 percent this year as homebuilders and banks declined on concern inflation will limit growth, overshadowing a rally in telecom shares.
The index trades at 11 times analysts’ earnings estimates, according to weekly data compiled by Bloomberg. That compares to a ratio of 14.1 for the Shanghai Composite Index, 7.7 for Russia’s Micex, and 15.2 for India’s Sensex.
Investors pulled 2.54 billion reais from Latin America’s biggest equity market this year through April 6, data from the Sao Paulo exchange show.
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