Ibovespa Falls to Five-Month Low as China Growth Slump Saps Vale

The Ibovespa fell to a five-month low as iron-ore producer Vale SA (VALE5) declined after data showed economic growth slowed in China, Brazil’s top trading parter.

Usinas Siderurgicas de Minas Gerais SA led declines among steelmakers. The MSCI Brazil/Materials Index was the worst performer among 10 industry groups. Gafisa SA (GFSA3) climbed to a two-week high after saying booked sales increased 45 percent in the last quarter of 2013.

The Ibovespa sank 1 percent to 48,708.41 at the close of trading in Sao Paulo, the lowest level since Aug. 7. The real appreciated 0.2 percent to 2.3377 per U.S. dollar at 5:20 p.m. local time. Trading volume on the Ibovespa was 55 percent below the 30-day average, according to data compiled by Bloomberg, with U.S. markets closed for the Martin Luther King Jr. holiday.

“China is in fact slowing down, which is negative for the Ibovespa, as many investors see Brazil as a proxy for China,” Clodoir Vieira, a partner at consulting firm Compliance Comunicacao Empresarial, said in a telephone interview from Sao Paulo.

China’s gross domestic product expanded 7.7 percent in the fourth quarter, the National Bureau of Statistics said. While that exceeded the median forecast among analysts surveyed by Bloomberg, it was slower than the 7.8 percent seen in the previous three-month period.

Vale fell 2.8 percent to 29.17 reais. Usiminas, as Usinas Siderurgicas is known, lost 2.2 percent to 13.63 reais.

Gafisa Climbs

Gafisa climbed 0.9 percent to 3.51 reais. The company had “good operating figures” in the fourth quarter, Luiz Mauricio Garcia and Alain Nicolau, analysts at Banco Bradesco SA’s brokerage unit, wrote in a note to clients today.

The Ibovespa sank 27 percent in dollar terms last year, the worst performance among the world’s 20 biggest equity gauges, as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

Trading volume of stocks in Sao Paulo was 3.24 billion reais today, data compiled by Bloomberg show. That compares with a daily average of 6.17 billion reais this month, according to data from 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: Brendan Walsh at bwalsh8@bloomberg.net

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