The Bovespa index posted its biggest monthly drop since September as concern mounted that Spain would become the next European country to need a bailout while cooling U.S. growth damped demand for Brazilian exports.
BRF - Brasil Foods SA, the world’s largest poultry exporter, fell after reporting first-quarter profit that trailed analysts’ estimates, pushing its monthly decline to 3.2 percent. Redecard SA (RDCD3), Brazil’s second-biggest card-payment processor, extended its April loss to 9.5 percent after controller Itau Unibanco (ITUB) said it may give up on its plan to buy out minority shareholders if a second valuation of the company indicates a price higher than it initially offered.
The Bovespa retreated 4.2 percent this month as mounting signs of a slowdown in China, the country’s main trading partner, stoked speculation that demand for commodities exports may falter. The gauge added 0.2 percent to 61,820.26 today after erasing an earlier drop of as much as 0.8 percent.
“After regaining confidence in the beginning of this year, investors turned cautious again with data that showed China is slowing down, the U.S. economy is not recovering so fast and the debt crisis in Europe is far from a happy end,” Pedro Galdi, an analyst at SLW Corretora, said by phone from Sao Paulo. “Brazilian economy and markets are very dependent on these other countries. And we see clearly a shift out of risk assets.”
Spain’s gross domestic product fell 0.3 percent in the first quarter, putting the euro region’s fourth-largest economy into recession as it struggles to cut its budget deficit. Consumer spending in the U.S., which accounts for about 70 percent of the economy, increased 0.3 percent in March after the biggest gain since August 2009, while an Institute for Supply Management-Chicago Inc. report showed business activity expanded in April at the slowest pace since 2009.
Brasil Foods dropped 2.8 percent today to 34.85 reais, the most in a month. First-quarter net income slumped to 153 million reais, from 383 million reais a year earlier, company said April 27 after markets closed. That compares with a 243.7 million-real average estimate of six analysts compiled by Bloomberg.
Redecard fell 0.8 percent to 32.10 reais. Itau, Latin America’s biggest lender by market value, said it may give up its plan to buy out the company’s minority shareholders for 11.8 billion reais after Lazard Asset Management LLC, Redecard’s second-biggest investor with a 10 percent stake, asked for a new appraisal. Itau reaffirmed its offer of 35 reais a share, according to a regulatory filing today, and said it won’t increase its bid if a second valuation of the company indicates a higher price.
BTG Pactual Drops
Banco BTG Pactual SA, the Bank led by Brazilian billionaire Andre Esteves, fell for the first time below the price of its initial public offering in Sao Paulo. Shares dropped 2.1 percent to 30.59 reais at the close of trading.
Brazilian markets will be closed tomorrow for a national holiday.
The Bovespa trades at 10.5 times analysts’ earnings estimates, in line with the 10.6 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume was 4.86 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 7.23 billion reais this year through April 27, according to data from the exchange.
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