The Bovespa index sank the most since September 2011 as commodities prices plunged amid concern that slower growth in China, Brazil’s top trading partner, will curb demand for raw materials.
Iron-ore producer Vale SA, whose top export market is China, fell to the lowest since July 2009. Steelmaker Usinas Siderurgicas de Minas Gerais SA slumped the most since October as the MSCI Brazil/Materials Index posted the biggest drop among 10 industry groups. Banco do Brasil SA slid after Brazil’s securities regulator suspended the $6.2 billion initial public offering of its insurance unit for 30 days.
The Bovespa tumbled 3.7 percent to 52,949.93 at the close of trading in Sao Paulo. All 69 stocks on the gauge dropped. The real weakened 1.6 percent to 2.0013 per dollar. The Standard & Poor’s GSCI index of 24 raw materials lost 2.3 percent to the lowest since July.
“The Bovespa has been pretty weak lately, and on a day like today, with bad news coming from abroad, things get even worse,” Fernando Goes, an analyst at Sao Paulo-based brokerage Clear Corretora, said in a telephone interview. “Economic data in Brazil have pointed to slow growth and fast inflation, and until we see things improving, the Bovespa might keep falling further.”
The Bovespa has declined 6.9 percent in the past month.
China’s economy unexpectedly lost momentum in the first quarter, expanding 7.7 percent from a year earlier, the National Bureau of Statistics said. That compares with the 8 percent median forecast among economists surveyed by Bloomberg and 7.9 percent in the prior quarter. Industrial output rose 8.9 percent in March from a year earlier, slower than the median estimate of 10.1 percent.
Vale fell 6.5 percent to 30.80 reais. Usiminas, as Usinas Siderurgicas is also known, sank 6.3 percent to 10.29 reais. Oil producer OGX Petroleo & Gas Participacoes SA tumbled 13 percent to 1.35 reais.
Banco do Brasil lost 1.8 percent to 27.85 reais.
Homebuilder Brookfield Incorporacoes SA fell 7.2 percent to 2.19 reais, leading losses by companies that sell on credit, amid speculation Brazil’s central bank will raise interest rates at the policy meeting scheduled for April 16-17.
Finance Minister Guido Mantega and central bank President Alexandre Tombini signaled last week that Brazil’s monetary authority will increase the target lending rate from a record low 7.25 percent after a report showed annual inflation accelerated above its target range for the first time since November 2011. Mantega said on April 12 that Brazil may take “unpopular measures” to rein in prices.
“Recent statements from various members of the government, especially the central bank, once again indicate that there is room for an interest-rate change,” Roberto Padovani, the chief economist at Votorantim Corretora, said in a phone interview from Sao Paulo.
The Bovespa has retreated 16 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 9.7 percent over the same period.
Brazil’s benchmark equity gauge trades at 10.6 times analysts’ earnings estimates for the next four quarters, compared with 9.9 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 7.67 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.46 billion reais this year through April 11, according to data compiled by the exchange.