Ibovespa Drops as China Concern Offsets Brazil Inflation Report

The Ibovespa fell, snapping a three-day winning streak, as China’s reduced industrial production growth overshadowed slower-than-forecast inflation in Brazil.

Gerdau SA (GGBR4), the South American country’s biggest steelmaker by market value, declined on concern a stronger real will slow exports and after company Chairman Jorge Gerdau Johannpeter said the market is still suffering from overcapacity. Homebuilder Gafisa SA (GFSA3) was the best performer on the equity gauge as investors pared bets on higher borrowing costs in Brazil.

The Ibovespa slid 0.3 percent to 51,032.80 at 12:04 p.m. in Sao Paulo, with 52 stocks lower and 14 higher, after gaining as much as 0.3 percent earlier today. The real strengthened 0.2 percent to 2.3133 per U.S. dollar. Factory output growth in China, Brazil’s most important trading partner, slowed to 10 percent in November from a year earlier.

“Investors are concerned that officials in China may be willing to set a lower growth rate target,” Felipe Rocha, an analyst at the brokerage firm Omar Camargo, said by telephone from Curitiba, Brazil.

Gerdau declined 0.9 percent to 18.19 reais. Gafisa advanced 2.9 percent to 3.50 reais.

Brazil’s benchmark equity index entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 25 percent in dollar terms this year, compared with a decline of 4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 4.59 billion reais yesterday, compared with a daily average of 7.48 billion reais this year, according to data from 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: Brendan Walsh at bwalsh8@bloomberg.net

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