The Ibovespa fell for the first time in five days as a report that showed manufacturing unexpectedly contracted in China, Brazil’s top trading partner, dimmed the outlook for commodity exporters.
Raw-material producers led declines as nine of 10 industry groups on the MSCI Brazil index dropped. Metalurgica Gerdau SA, the parent of Latin America’s biggest steelmaker, fell the most on the benchmark. Iron-ore producer Vale SA sank the most in a week. Meatpacker Marfrig Alimentos SA slid after Moody’s Investors Service placed the company’s rating under review for a possible reduction.
The Ibovespa lost 0.1 percent to 56,349.91 at the close of trading in Sao Paulo. Thirty-seven of the 71 stocks on the measure declined. The real gained 0.3 percent to 2.0440 per dollar, snapping a seven-session drop. The Bloomberg Base Metals 3-Month Price Commodity Index sank 1.7 percent.
“The problem in China is that data showed not only slower growth, but a contraction in manufacturing,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro. “Investors will react badly to these figures in the short term, and Brazil suffers because of its links with China.”
A preliminary May reading of 49.6 for a China Purchasing Managers’ Index released today by HSBC Holdings Plc and Markit Economics compared with a final 50.4 for April and the 50.4 median estimate among economists surveyed by Bloomberg. A reading above 50 indicates expansion.
Commodities producers account for about 42 percent of the Ibovespa’s weighting, according to data compiled by Bloomberg. Vale dropped 1.8 percent to 30.38 reais as metals declined and after a report from Folha de S.Paulo saying that Brazil may delay the submission of a new mining code to Congress. The Sao Paulo-based newspaper didn’t say where it got the information.
A delay in the passage of the mining code would be “slightly negative” for Vale, Bank of America Corp. analysts including Felipe Hirai wrote in a note to clients. Investors may avoid the stock until the new industry rules are disclosed, the analysts wrote.
Metalurgica Gerdau tumbled 3.3 percent to 17.39 reais. Marfrig retreated 1.6 percent to 7.35 reais.
Oil producer OGX Petroleo & Gas Participacoes SA jumped 4.5 percent to 1.87 reais, helping the Ibovespa pare losses of as much as 1.9 percent today.
Brazil’s benchmark equity gauge has declined 7.6 percent this year, underperforming emerging markets including China, Russia and India, amid concern that quickening inflation will curb the nation’s economic recovery. The Ibovespa trades at 12.8 times analysts’ earnings estimates for the next four quarters, compared with a multiple of 10.8 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 6.95 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.74 billion reais this year through May 20, according to data compiled by the exchange.