The Bovespa index fell as companies owned by billionaire Eike Batista tumbled after ratings on his oil unit OGX Petroleo & Gas Participacoes SA were cut by firms including JPMorgan Chase & Co.
OGX and MMX Mineracao & Metalicos SA, Batista’s mining company, were the worst performers on the gauge. OGX was reduced to the equivalent of sell at Banco Santander SA and Citigroup Inc. and hold at JPMorgan, Banco Itau BBA SA and Banco Bradesco SA’s brokerage unit after reporting on March 11 a decline in oil production.
The Bovespa fell 1.4 percent to 57,385.90 at the close in Sao Paulo. Fifty-one stocks sank on the measure while 15 advanced. The real depreciated 0.4 percent to 1.9721 per U.S. dollar. OGX tumbled 9.2 percent to a record-low 2.37 reais.
“What happened with OGX is something that’s not affecting just the company itself,” Rodolfo Amstalden, an analyst at consulting firm Empiricus Research, said by phone from Sao Paulo. “It’s a sign of difficulties Eike is facing in all his ventures.”
OGX’s production at its three offshore wells in the Campos Basin fell 14 percent to a combined 11,300 barrels a day in February, the company said this week. UBS AG and Credit Suisse Group AG yesterday also lowered their recommendation for the crude producer to sell.
MMX dropped 10 percent to 3.39 reais.
Speculation among traders that the country’s credit rating will be cut also pushed stocks down, according to Fausto Gouveia, who helps manage 380 million reais at Legan Administracao de Recursos.
“The market took a dive after some rumors that Brazil’s sovereign rating could be downgraded,” Gouveia said by phone from Sao Paulo. “Of course that’d be very negative, but I’d be really surprised if that happens. I don’t see any reason for such a move.”
Mauro Leos, a senior analyst at Moody’s Investors Service in New York, said in an interview that the ratings company plans no change in its assessment of Brazil. Sebastian Briozzo, a Standard & Poor’s analyst in Buenos Aires, said in an interview there is no change in Brazil’s rating or outlook. Brian Bertsch, a Fitch Ratings spokesman, didn’t return a phone call and e-mail seeking comment.
Declines on the Bovespa were limited as plane builder Embraer SA rose 1.9 percent to 17.47 reais, the highest since April 2008. The company reported fourth-quarter earnings before interest, taxes, depreciation and amortization, or Ebitda, of 641.1 million reais, compared with an average estimate of 519.6 million reais among 10 analysts surveyed by Bloomberg.
Pao de Acucar Gains
“In general, companies in Brazil will probably report better figures this year when compared to 2013, because growth should speed up,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro.
Twenty-eight of 41 companies on the Bovespa index that have reported fourth-quarter earnings produced results that trailed analysts’ estimates, according to data compiled by Bloomberg.
Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil’s biggest retailer, gained 2.9 percent to 106.82 reais after JPMorgan raised its recommendation on the stock to the equivalent of buy.
The Bovespa has dropped 9.4 percent from this year’s high on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has slid 4.2 percent over the same period.
Brazil’s benchmark equity gauge trades at 11.6 times analysts’ earnings estimates for the next four quarters, compared with 10.9 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 6.41 billion reais yesterday, which compares with a daily average of 7.62 billion reais this year through March 11, according to data compiled by the exchange.