Centrais Eletricas Brasileiras SA, South America’s largest power generator, fell to the lowest in nine years on a report it will lose 20 billion reais ($9.6 billion) a year if it accepts a government proposal on rates.
Eletrobras, as the state-run company is known, tumbled 12 percent to a nine-year low of 11.60 reais. It was the biggest fall among 818 stocks in the MSCI Emerging Markets Index today.
The stock has lost 31 percent since Nov. 1 when the government published a proposal for companies with generation and transmission assets set to expire in 2015 and 2017 to reduce rates in exchange for automatic license renewals. Newspaper Estado de Sao Paulo reported yesterday, a public holiday in Brazil, that accepting the proposal could lead to losses of 20 billion reais a year. The company didn’t respond to an e-mailed request for comment on the Estado story.
Today’s plunge was spurred by “newspaper reports yesterday saying how much the company will lose,” Marcelo Varejao, an analyst at brokerage Socopa, said in a phone interview from Sao Paulo. “Earnings also weigh because people can start projecting what things will be like in the future.”
Eletrobras reported earnings after the close of trading Nov. 14, with quarterly profit falling to 1 billion reais from 1.56 billion reais.