The Bovespa index posted a second consecutive weekly decline amid concern that Europe’s debt crisis will intensify, crimping the global economy and eroding demand for emerging-market assets.
OSX Brasil SA tumbled the most on record, pacing a decline by companies owned by billionaire Eike Batista as concern mounted that they’re losing access to financing needed to carry out investment plans. Banco Santander Brasil SA dropped the most among banks as traders pared bets on higher benchmark borrowing costs, rekindling concern that financial institutions will have limited room to raise loan rates.
The Bovespa dropped 0.6 percent to 55,243.40 at the close of trading in Sao Paulo. The benchmark declined 2.9 percent this week. Thirty-nine stocks fell today while 27 rose. The real weakened 0.1 percent to 2.0094 per dollar. German business confidence unexpectedly fell from a 10-month high in March, the Ifo institute reported today in Munich.
“There’s still a lot of concern about Europe, not only because of the sovereign debt problem, but also because economic activity still seems pretty weak, as figures from Germany today show,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “The short-term outlook for the Bovespa is still doubtful.”
OSX, Batista’s shipbuilding and oil services unit, plunged 17 percent to a record-low 4.88 reais. LLX Logistica SA tumbled 11 percent to 1.92 reais. Oil producer OGX Petroleo & Gas Participacoes SA dropped 9.2 percent to 2.27 reais.
Santander Brasil fell 1.4 percent to 14.72 reais.
The Bovespa earlier gained as much as 0.6 percent as homebuilders advanced after a report showed inflation slowed more than economists forecast, damping speculation that policy makers will raise interest rates.
Consumer prices, as measured by the government’s IPCA-15 price index, increased 0.49 percent in the month through mid-March after rising 0.68 percent in the previous period. The median forecast of economists surveyed by Bloomberg was for a 0.53 percent advance.
“Once it becomes clearer if, or when, the central bank will increase interest rates and by how much, the stock market should start performing a little better,” Otavio Vieira, who helps manage 270 million reais as a partner at hedge fund Fides Asset Management, said by phone from Rio de Janeiro.
Homebuilder Cyrela Brazil Realty SA Empreendimentos e Participacoes rallied 3.7 percent to 16.65 reais.
The Bovespa has retreated 13 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 lost 7.1 percent over the same period.
Brazil’s benchmark equity gauge trades at 11.2 times analysts’ earnings estimates for the next four quarters, compared with 10.7 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 6.19 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.67 billion reais this year through March 18, according to data compiled by the exchange.