Bovespa Stock Index Falls for Fifth Day as Homebuilders Tumble

April 14 (Bloomberg) -- Brazilian stocks fell for a fifth day, the longest losing streak in five months, as homebuilders slid after Gafisa SA and MRV Engenharia & Participacoes SA reported a decline in first-quarter sales.

Gafisa said first-quarter contracted sales fell 4 percent from a year earlier. Lupatech SA, Brazil’s biggest provider of oil equipment and services, tumbled to the lowest price in almost five years after dismissing its chief financial officer.

The Bovespa stock index fell 0.3 percent to 66,278.89 at the close of Sao Paulo trading at 4:15 p.m. New York time. Forty-four stocks slid, while 25 rose. The measure is down 3.6 percent this week, heading for the biggest drop since the five days ended Nov. 26.

“There’s still concern about inflation around the world,” said Alvaro Bandeira, director of Rio de Janeiro-based brokerage Ativa Corretora. “Investors are worried it could hurt the global recovery, reducing demand for more risky assets.”

The Bovespa’s decline was limited as traders pared bets for higher borrowing costs and oil rose for a second day. The gauge rose as much as 0.8 percent early in the session as Cia. de Bebidas das Americas, Latin America’s largest brewer, led an advance for companies that depend on domestic demand.

The Bovespa declined for a fourth day yesterday, the longest losing streak in more than two months, on speculation China may take further measures to cool the economy and curb inflation in Brazil’s biggest trading partner.

Gafisa fell 3.1 percent to 10.04 reais. MRV dropped 2.2 percent to 13.15 reais. The BM&FBovespa Real Estate Index declined 1.4 percent and is down 11 percent since Jan. 1.

Sales

First-quarter contracted sales at Gafisa fell to 822 million reais ($519 million) from a year earlier, according to a regulatory filing. New projects announced from January to March totaled 513 million reais, a 27 percent decline from a year earlier.

MRV said preliminary first-quarter contracted sales were 830.8 million reais and new projects totaled 1.04 billion reais, according to a filing yesterday. The sales figure was 23 percent below Bank of America Corp.’s estimate.

Lupatech tumbled 2.5 percent to 12.69 reais, the lowest price since the company’s May 2006 share sale. The company dismissed Chief Financial Officer Thiago Alonso de Oliveira and said Alexandre Jose Guerra de Castro Monteiro will replace him, taking the newly created position of vice president of finance.

Lupatech didn’t give a reason for Oliveira’s removal.

In the interest-rate futures market, yields on contracts maturing in January 2012 retreated 4 basis points, or 0.04 percentage points, to 12.25 percent.

Yields fell as concern mounted that Europe’s most indebted nations may be forced to restructure their debts, dimming the outlook for global growth, which would reduce the need for a tighter monetary policy in Brazil.

Taming Inflation

Frederick Searby, head of Latin American equity strategy at Deutsche Bank AG in New York, said Brazil’s government decrees aimed at taming inflation may only be creating investor uncertainty. Raising taxes on consumer credit and local bond purchases by foreign investors, among other measures, has yet to staunch rising prices or currency gains, he said in an interview in New York yesterday.

“It’s kind of an exercise in futility, trying to control capital,” Searby said. “Short term, it’s going to appreciate, and medium-term, it may really reverse hard.”

The real gained 0.5 percent to 1.5785 per U.S. dollar. It has gained 46 percent since the end of 2008.

Policy Concern

Investors remain wary of Brazilian stocks because they want to know whether the government plans to raise the so-called IOF tax on foreigners’ stock purchases, Searby said.

“All these actions have created a lot of policy uncertainty,” he said.

Ambev climbed 3.3 percent to 46.50 reais, the most since March 2.

Crude oil climbed for a second day in New York on reports that Saudi Arabia, holder of the world’s largest oil reserves, reduced output this month.

OSX Brasil SA, the shipbuilder controlled by Brazilian billionaire Eike Batista, climbed 4.6 percent to 481.05 reais, the biggest advance since Feb. 24. The company said in a filing it obtained three orders for so-called FPSO platforms from OGX Petroleo & Gas Participacoes SA, which is also controlled by Batista, taking its confirmed orders to a value of $4.8 billion.

CPFL Energia

Tele Norte Leste Participacoes SA, Brazil’s biggest fixed-line company, advanced 0.6 percent to 29.50 reais. The company’s Chief Executive Officer Luiz Eduardo Falco will leave his post at the end of the first half of this year, according to a regulatory filing.

CPFL Energia SA, Brazil’s largest private-sector power distributor, rose 0.7 percent to 45.12 reais. Bradespar SA, the holding unit of Banco Bradesco SA, has no plans to sell its 5.3 percent stake in CPFL in the “short-term,” Bradespar’s investor relations director, Renato da Cruz Gomes, said at a meeting in Sao Paulo.

The Bovespa is down 4.4 percent this year as homebuilders and banks declined on concern inflation will limit growth, overshadowing a rally in telecom shares.

The index trades at 11 times analysts’ earnings estimates, according to weekly data compiled by Bloomberg. That compares to a ratio of 14.1 for the Shanghai Composite Index, 7.7 for Russia’s Micex, and 15.2 for India’s Sensex.

Investors pulled 2.54 billion reais from Latin America’s biggest equity market this year through April 6, data from the Sao Paulo exchange show.

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