Bovespa Stock Index Declines for Second Session as Oi, MMX Slump

The Bovespa (IBOV) stock index fell for a second session as iron-ore producer MMX Mineracao & Metalicos SA and phone company Oi SA (OIBR4) tumbled amid concern management changes may hurt their operations.

Oi, Brazil’s third-largest publicly traded phone company, was the worst performer on the gauge after Veja reported that controlling shareholders disapprove of the results achieved by Chief Executive Officer Francisco Valim. The magazine didn’t say how it obtained the information. MMX fell after announcing the second change in its top executive in the past 15 months.

The Bovespa index lost 0.1 percent to 61,899.71 at the close of trading in Sao Paulo. Thirty-six stocks advanced on the measure while 30 fell. The real was little changed at 2.0419 per dollar. Trading volume on the Bovespa was 36 percent lower than the average over the previous 10 days amid a holiday in the U.S., data compiled by Bloomberg show.

“Investors don’t have such a negative view about the job Valim’s done at Oi, so the news report about disagreements between him and shareholders is a negative,” Luis Gustavo Pereira, an analyst at Futura Corretora in Sao Paulo, said in a telephone interview. “For MMX, it’s the second management change in not such a long period. Some people may take it as a reason to be more cautious on the stock.”

Oi slumped 5.1 percent to 8.70 reais. The company will report earnings per share of 42 centavos for 2012, a 75 percent decrease from a year before, according to the average estimate of 11 analysts surveyed by Bloomberg. Oi’s press office declined to comment on Veja’s report.

MMX Slumps

MMX fell 2 percent to 3.90 reais. The iron-ore producer controlled by billionaire Eike Batista said in a regulatory filing on Jan. 18 that it named Carlos Gonzalez as chief executive officer, replacing Guilherme Escalhao, who is resigning from the company. Escalhao was named as MMX’s top official in October 2011.

Some retailers and construction companies advanced after a measure of inflation increased less than analysts forecast, spurring speculation policy makers will keep benchmark borrowing costs at a record-low 7.25 percent for longer to boost growth.

Online retailer B2W Cia. Global do Varejo rose 2.8 percent to 16.74 reais. Natura Cosmeticos SA, Brazil’s biggest cosmetics maker, jumped 1.6 percent to 56.50 reais.

Inflation Data

Swap rates fell on most contracts after the IGP-M index of wholesale, construction and consumer prices rose 0.34 percent in the 20-day period ending Jan. 10, according to a report from the Getulio Vargas Foundation today. Economists surveyed by Bloomberg had predicted an increase of 0.38 percent.

“The IGP-M figures came in slightly below forecasts, making investors bet that in this scenario the central bank will focus more on growth and won’t rise the benchmark rate this year,” Luciano Rostagno, the chief strategist at Banco WestLB do Brasil SA, said by phone from Sao Paulo.

The Bovespa entered a bull market on Jan. 3 after rising 21 percent from last year’s low on June 5 as stimulus from central banks around the world eased concern that economic growth might miss expectations while borrowing costs at a record low in Brazil boosted equity demand. The index has since pared its advance to 18 percent.

Brazil’s benchmark equity gauge trades at 11.5 times analysts’ earnings estimates for the next four quarters, compared with 10.9 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

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 at papadopoulos@bloomberg.net

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