Ibovespa Ends Two-Day Gain as Vale Drops on China Growth Concern

The Ibovespa declined for the first time in three days as exporters including iron-ore producer Vale SA (VALE5) sank amid concern demand for raw materials will falter in China, Brazil’s top trading partner.

AmBev SA (ABEV3), a unit of Anheuser-Busch InBev NV, dropped after Valor Economico reported Brazil may raise taxes on soft drinks and beer starting April 1. Toll-road operator EcoRodovias Infraestrutura e Logistica SA sank the most in two weeks after fourth-quarter earnings that trailed analysts’ estimates.

The Ibovespa slid 0.3 percent to 46,018.25 at 10:50 a.m. in Sao Paulo, with 42 stocks falling and 30 rising. The real weakened 0.1 percent to 2.3359 per U.S. dollar. The Standard & Poor’s GSCI index of 24 raw materials declined 0.5 percent after the collapse of a private developer in China spurred concern the industry may face defaults as economic growth slows.

“China has become an important trading partner for Brazil in the past few years, and any noise there affects the Brazilian market,” Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil in Sao Paulo, said in a phone interview. “There are problems with the Brazilian economy that are keeping equities from rebounding, but external risks such as a slowdown in China are also a factor.”

Vale fell 0.6 percent to 26.38 reais, contributing the most to the Ibovespa’s decline. AmBev dropped 0.9 percent to 16.64 reais. EcoRodovias lost 2.4 percent to 12.69 reais.

The Ibovespa entered a bear market on March 14 after falling 20 percent from its October 2013 high through that day, with real-estate companies and retailers falling amid concern that an economic slowdown will spur a cut in Brazil’s credit rating. The gauge has since pared the drop to 18 percent.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net Richard Richtmyer, Dennis Fitzgerald

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