Ibovespa Declines on Brazil Slower Industrial Growth Forecast

The Ibovespa (BZA) fell as homebuilders dropped and planemaker Embraer SA (EMBR3) led industrial stocks lower after economists in a central bank survey cut their forecasts for growth in Brazil’s manufacturing output.

Homebuilder PDG Realty SA (PDGR3) contributed the most to the gauge’s decline. Hypermarcas SA (HYPE3), a manufacturer of consumer health products, advanced after posting earnings that exceeded analysts’ estimates for a third consecutive quarter.

Brazil’s main equity index dropped 0.1 percent to 55,429.88 at the close of trading in Sao Paulo. Forty-five stocks retreated while 26 advanced. The real was little changed at 2.0096 per dollar.

About 100 economists in a weekly central bank survey reduced their median estimate for 2013 industrial output growth to 2.39 percent from 2.83 percent. Output in March rose 0.7 percent from February, the national statistics agency said May 3. Analysts had estimated a 1.3 percent increase.

“After the disappointing manufacturing production numbers, the market is reducing expectations for economic growth this year, so stocks linked to domestic demand such as homebuilders are also suffering,” Luis Gustavo Pereira, an analyst at brokerage Futura Corretora in Sao Paulo, said in a phone interview.

Embraer sank 1.9 percent to 17.48 reais. PDG fell 4.8 percent to 2.18 reais, the lowest close since December 2008.

Hypermarcas rose 4.4 percent to 16.60 reais. The company’s adjusted net income almost tripled to 102.1 million reais in the first quarter from a year earlier, according to data compiled by Bloomberg. The average estimate of seven analysts was 83.7 million reais.

Quarterly Earnings

Twelve of the 21 companies on the Ibovespa that have already reported first-quarter earnings beat analysts’ estimates, according to data compiled by Bloomberg.

“Data about the Brazilian economy have been very weak lately, and that’s holding the local stock market back at a moment when other exchanges are advancing,” Felipe Rocha, an analyst at brokerage Omar Camargo, said in a telephone interview from Curitiba, Brazil. “Those numbers are overshadowing some pretty consistent results that companies release.”

The Standard & Poor’s 500 Index gained 0.2 percent today while the MSCI Emerging Markets Index of 21 developing nations’ equities advanced 0.4 percent.

The Brazilian benchmark gauge pared losses of as much as 1.5 percent today as oil producer OGX Petroleo & Gas Participacoes SA jumped 7.7 percent.

Relative Value

The Ibovespa has retreated 12 percent from this year’s peak 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 of shares in Brazil, Russia, India and China has lost 5.2 percent over the same period.

Brazil’s benchmark equity index trades at 11.3 times analysts’ earnings estimates for the next four quarters, compared with 10.6 for the MSCI’s emerging-market gauge, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 7.8 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.74 billion reais this year through May 3, according to data compiled by the exchange.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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