Bovespa Falls Most in 5 Weeks as China Data Spur Growth Concern

The Bovespa index tumbled the most in five weeks after a report showing China imported fewer goods than forecast last month stoked concern that growth may falter in Brazil’s biggest trading partner.

Iron-ore miner Vale SA (VALE5), whose top export market is China, fell to a one-month low. Petroleo Brasileiro SA (PETR4) and OGX Petroleo & Gas Participacoes SA (OGXP3) followed crude lower. Homebuilder Gafisa SA (GFSA3) slid after reporting a fourth-quarter loss.

The Bovespa fell 1.9 percent to 61,738.28 at the close of trading in Sao Paulo. Fifty-four stocks dropped while 12 advanced. It was the second-worst performer among emerging- markets benchmarks behind Saudi Arabia’s Tadawul All Share Index. Global stocks fell as a surge in Spanish and Italian bond yields fueled concern Europe’s debt crisis is worsening.

A customs bureau report today showed China’s inbound shipments increased 5.3 percent in March, below the 9 percent median estimate among analysts surveyed by Bloomberg and the 39.6 percent jump in February.

“China’s trade report brought some bad news for Brazil,” Clodoir Vieira, an economist at brokerage Souza Barros Corretora, said by phone from Sao Paulo. “China is a very important buyer of Brazilian goods, and the risk of a deeper slowdown over there seems to be increasing.”

Crude for May delivery fell to an eight-week low on the New York Mercantile Exchange on projections that U.S. stockpiles rose to the highest level for this time of year since 1990 and after the customs bureau said China’s net crude imports declined 6 percent in March.

Vale dropped 1.1 percent to 40.32 reais. OGX fell 7.3 percent to 13.16 reais. Petrobras, as Petroleo Brasileiro is known, lost 1.9 percent to 21.19 reais.

China Growth Concern

The Bovespa has fallen 12 percent in dollar terms since March 5, when China said it would lower its growth target to 7.5 percent for 2012, down from a target of 8 percent annually over the past seven years. Brazil’s benchmark gauge was the fourth- worst performer among 94 major equity indexes tracked by Bloomberg in the period.

The real weakened as much as 1.1 percent today after Finance Minister Guido Mantega said during an event in Sao Paulo that Brazil will keep taking steps to prevent its currency from strengthening against the dollar and hurting manufacturers.

The government’s attempts to curb currency gains won’t be enough to shore up growth and will end up driving investors away from Brazilian equities, said Christopher Palmer, who helps manage $2.5 billion of assets as director of global emerging markets for Henderson Global Investors Ltd. High borrowing costs are still one of the main reasons to stop the economy from growing faster, according to Palmer.

Currency Outlook

“While the rest of the world is trying to deal with so many other problems, Brazil’s first and foremost issue is the level of the real, which is really not the primary reason why the Brazilian economy is slowing down,” Palmer said by phone from London. “The Brazilian government is not doing anyone any favors by, in the middle of what is still a very weak market in Europe, and with the economy not so strong in China, coming out and talking about a weaker currency as the answer. That’s clearly not the answer.”

Spanish bonds slumped today after Economy Minister Luis de Guindos declined to rule out a rescue and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need more capital if the economy weakens more than expected. The additional yield investors demand to hold Italian 10-year bonds over similar-maturity German bunds rose to more than 4 percentage points for the first time since Feb. 16.

Natura Gains

Natura Cosmeticos SA (NATU3), Brazil’s biggest cosmetics maker, rose 3.8 percent to 41.50 reais as Mantega said at the same event in Sao Paulo that Brazil will continue to take steps to foster consumer demand so that the country isn’t affected by a global slowdown. Policy makers have lowered interest rates, cut taxes and increased subsidized credit to ensure growth accelerates to 4.5 percent this year from 2.7 percent last year.

Gafisa, Brazil’s fifth-biggest homebuilder by revenue, slid 1.7 percent to 4.03 reais. The company posted a consolidated net loss of 1.03 billion reais ($562 million) in the last three months of 2011, which compares with a loss of 14.1 million reais a year earlier, according to a regulatory filing today.

BR Malls Participacoes SA (BRML3), Brazil’s biggest owner of shopping malls, gained 1.2 percent to 24.12 reais. The company signed an agreement with Indianapolis-based Simon Property Group Inc., the largest U.S. mall owner, to form a joint venture to develop outlet centers in Latin America’s biggest economy, according to a statement from Simon.

Year-to-Date Performance

Brazil’s benchmark equity measure has gained 8.8 percent this year, buoyed by local interest-rate cuts, signs of growth in the U.S. and speculation Europe may be closer to resolving its debt crisis. The gauge trades at 10.5 times analysts’ earnings estimates, which compares with a 10.7 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 7.49 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.14 billion reais this year through April 4, 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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.