Ibovespa Futures Drop as JPMorgan Says Brazil Growth Disappoints

Ibovespa futures dropped, a sign the stock gauge may pare its biggest weekly gain in 10 months, as JPMorgan Chase & Co. reaffirmed its sell recommendation on Brazilian equities, citing “disappointing” growth.

MPX Energia SA (MPXE3), the energy company controlled by billionaire Eike Batista, may be active after Goldman Sachs Group Inc. recommended buying the stock. Homebuilder Helbor Empreendimentos SA (HBOR3) may move after saying booked sales dropped 20 percent in the second quarter from a year earlier.

Ibovespa futures contracts expiring in August fell 0.4 percent to 47,330 at 9:21 a.m. in Sao Paulo. The gauge is up 4.7 percent this week, the most since the week ending on Sept. 14. The real climbed 0.2 percent to 2.2233 per dollar.

“Disappointment remains the norm” when it comes to Brazil’s growth outlook, JPMorgan strategist Emy Shayo wrote in a note to clients today. “We don’t expect much improvement going forward as neither the global scenario nor the local economic policy guidance is likely to change.”

Analysts covering Brazil have reduced their 2013 growth forecast for nine straight weeks, most recently cutting it to 2.31 percent in a bank survey of about 100 economists released earlier this week.

The Ibovespa has slumped 22 percent this year through yesterday, wiping out $230 billion from the value of Brazilian equities, according to data compiled by Bloomberg. Brazil’s main equity gauge trades at 11.9 times analysts’ earnings estimates for the next four quarters, compared with 10.3 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume for stocks in Sao Paulo was 5.91 billion reais yesterday, which compares with a daily average of 7.78 billion reais this year through July 17, 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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