The Bovespa index dropped for a third day as phone company Oi SA sank after naming a new chief executive officer.
Jose Mauro Mettrau Carneiro da Cunha will become Oi’s top executive as analysts estimate adjusted profit sank 33 percent last year. Usinas Siderurgicas de Minas Gerais SA, Brazil’s second-biggest steelmaker, fell after Banco BTG Pactual SA recommended selling. CCX Carvao da Colombia SA jumped after controller Eike Batista offered to buy back the stock.
The Bovespa lost 0.3 percent to 61,692.29 at the close of trading in Sao Paulo. Thirty-nine stocks fell on the measure while 26 gained. The real weakened 0.3 percent to 2.0462 per dollar at 5:52 p.m. in Sao Paulo.
“Investors are reacting badly to the change in Oi’s management,” Fernando Goes, an analyst at brokerage Clear Corretora in Sao Paulo, said in a phone interview. “This drop may end up proving a bit excessive, but to some extent all changes of this kind bring uncertainties to the companies.”
Oi sank 7.9 percent to 8.01 reais, the biggest drop on the benchmark. Trading surged to more than seven times the average full-day volume of the past three months.
Usiminas, as Usinas Siderurgicas is also known, dropped 6.1 percent to 11.30 reais. Shares more than doubled in the six months ended yesterday, which may be excessive given the outlook for the producer, BTG Pactual’s analysts including Edmo Chagas wrote in a note to clients.
“The market is too enthusiastic about a potential earnings improvement, and we see significant room for disappointment,” BTG Pactual’s analysts wrote in the report.
Cyrela Brazil Realty SA Empreendimentos e Participacoes, Brazil’s largest homebuilder by sales, retreated 2.7 percent to 18 reais after saying in a regulatory filing yesterday that sales declined 7.6 percent to 6 billion reais in 2012. That was 13 percent below Banco Itau BBA’s forecast, according to a research note today from analysts including David Lawant, who called the company’s results “weak.”
Centrais Eletricas Brasileiras SA gained 6.2 percent to 13.70 reais as power utilities rallied amid eased concern that Brazil may ration electricity. CPFL Energia SA advanced 0.8 percent to 21.58 reais as water levels at reservoirs feeding hydropower dams remained above the minimum considered safe by the government.
CCX, the coal company controlled by Brazilian billionaire Batista, soared 22 percent to 3.83 reais, the highest closing level in five months. Batista offered as much as 4.31 reais per share payable in stock of other companies controlled by his EBX Group Co. holding, according to a regulatory filing yesterday. The shares surged a record 45 percent yesterday before the buyback was disclosed.
The Bovespa entered a bull market on Jan. 3 after rising 21 percent from last year’s low on June 5 as stimulus from central banks around the world eased concern economic growth might miss expectations while borrowing costs at a record low in Brazil boosted equity demand. The index has since pared its advance to 18 percent.
Brazil’s benchmark equity gauge trades at 11.5 times analysts’ earnings estimates for the next four quarters, compared with 11 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume of stocks in Sao Paulo was 6.41 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.25 billion reais in 2012, according to data compiled by the exchange.