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Bovespa Index Set for Weekly Decline as Earnings Miss Sinks MRV

The Bovespa (IBOV) index headed for a weekly drop as MRV Engenharia & Participacoes SA led homebuilders lower after posting earnings that trailed analysts’ projections for a fifth quarter.

Real-estate brokerage LPS Brasil Consultoria de Imoveis SA traded at a one-month low after disappointing fourth-quarter sales. The BM&FBovespa Real Estate Index was poised for its weakest level in six months.

The Bovespa declined 2 percent this week to 57,285.15 as of 1:20 p.m. in Sao Paulo and was little changed today. The real depreciated 0.3 percent to 1.9770 per dollar. Thirty of 44 companies on the benchmark index that have reported fourth- quarter earnings missed analysts’ estimates, according to data compiled by Bloomberg.

“We’ve seen many companies reporting earnings that were worse than expected in the fourth quarter, and the real estate industry is one of the sectors with the biggest disappointments,” Hamilton Moreira, a strategist at Banco do Brasil SA, said by phone from Sao Paulo.

MRV tumbled 7.5 percent today to 9.86 reais. The company posted adjusted net income of 115.4 million reais in the fourth quarter, compared with the average forecast of 144.4 million reais among nine analysts surveyed by Bloomberg. The figures spurred Banco BTG Pactual SA to lower its recommendation to the equivalent of hold.

Gafisa Retreat

Gafisa SA (GFSA3), which on March 12 reported an unexpected quarterly loss, retreated 3.1 percent today to 3.87 reais. LPS Brasil fell 0.7 percent to 35.35 reais.

The Bovespa has dropped 9.5 percent from this year’s high on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index (MXBRIC) of shares in Brazil, Russia, India and China has slid 4 percent over the same period.

Brazil’s benchmark equity gauge trades at 11.6 times analysts’ earnings estimates for the next four quarters, compared with 10.9 for the MSCI Emerging Markets Index (MXEF) of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 7.76 billion reais yesterday, which compares with a daily average of 7.6 billion reais this year through March 13, according to data compiled by 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 at papadopoulos@bloomberg.net

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