BlackRock Inc. (BLK) has cut its holdings of Vale SA (VALE3), the world’s largest iron-ore producer, as China’s slowing growth drives down metals prices, fund manager Will Landers said three months after calling the stock the “most obvious” purchase in Brazil.
“Prices fell in China faster than we expected,” Landers, who manages about $6 billion in Latin American equities at New York-based BlackRock, said in an interview on Bloomberg Television today. He said he’s sold Vale shares “in the last couple of months” and went to a neutral allocation on the stock in his portfolio from overweight.
The move marks a reversal for Landers, who in a May 22 interview said that Vale was the “most obvious” stock to buy in Brazil because declines in the currency were boosting the company’s export revenue. The real has slumped 20 percent in the past 12 months, the biggest selloff among major currencies tracked by Bloomberg.
Voting shares of Vale, based in Rio de Janeiro, have dropped 12 percent this year, underperforming Brazil’s benchmark Bovespa index, which has gained 3 percent. The stock fell 0.5 percent today to 34.53 reais in Sao Paulo trading.
Revenue gains from the weaker currency are being offset by a plunge in iron-ore prices overseas. Iron ore fell below $100 for the first time since 2009 on concern that rising stockpiles and the slowdown in China will cut demand for the steel ingredient.
Ore with 62 percent iron content delivered to the Chinese port of Tianjin slumped 4.9 percent to $99.60 a dry ton yesterday, according to a gauge compiled by The Steel Index Ltd. Prices fell to $99.40 a dry ton today and are heading for a fifth monthly drop, taking this year’s loss to 28 percent.