The Ibovespa fell, extending the worst year-to-date rout among major emerging markets, as Brazil’s faltering economic growth prompted JPMorgan Chase & Co. to reaffirm its sell recommendation on the country’s stocks.
Real estate company Helbor Empreendimentos SA sank after saying booked sales declined 20 percent in the second quarter from a year earlier. State-run power utility Centrais Eletricas Brasileiras SA capped its biggest weekly drop in six weeks after workers went on strike July 15, demanding higher wages. Online retailer B2W Cia Digital gained the most on the gauge.
The Ibovespa retreated 0.5 percent to 47,400.23 at the close of trading in Sao Paulo, extending this year’s decline to 22 percent. The real weakened 0.7 percent to 2.2437 per dollar at 5:35 p.m. local time. The equity index is up 4.1 percent for the week, the most in 10 months, after remarks from Federal Reserve Chairman Ben S. Bernanke damped speculation that the U.S. central bank was preparing to end bond purchases that have bolstered emerging-market assets.
“Disappointment remains the norm” when it comes to Brazil’s growth outlook, JPMorgan strategist Emy Shayo wrote in a note to clients today. “We don’t expect much improvement going forward as neither the global scenario nor the local economic policy guidance is likely to change.”
The Ibovespa’s decline wiped out $230 billion from the value of Brazilian equities this year as of yesterday, according to data compiled by Bloomberg, as economic expansion faltered and inflation surged above policy makers’ target range.
Analysts covering Brazil have reduced their 2013 growth forecast for nine straight weeks, cutting it to 2.31 percent in a central bank survey of about 100 financial institutions published July 15.
Helbor declined 2.2 percent to 8.72 reais.
Eletrobras, as Centrais Eletricas is also known, dropped 2.6 percent to 8.94 reais, extending its decline this week to 3.7 percent. The strike will continue indefinitely after a meeting between workers and the company ended without an agreement today, Emanuel Torres, a director of Aeel, one of the utility’s employee unions, told Bloomberg News by phone today.
Global stocks gained this week percent after Bernanke said on July 17 in testimony before the U.S. House Financial Services Committee that the current pace of bond purchases “could be maintained for longer” in case “the outlook for employment were to become relatively less favorable.”
“Bernanke’s speech brought some calm not just to Brazil, but to global markets,” Alexandre Ghirghi, a portfolio manager at Metodo Investimentos, said by phone from Sao Paulo. “This means that the rest of the world probably won’t be a problem for Brazil. For the Ibovespa to recover, we need to see economic and earnings growth picking up.”
LLX Logistica SA, the logistics company controlled by billionaire Eike Batista, rose 8.9 percent to 86 centavos. Batista said in an opinion article in Valor Economico today that he regrets taking the producer public in 2008, pledged to honor his debts and partly blamed auditors for building up expectations among investors.
B2W surged 14 percent to 10.79 reais, the highest level since May 29. Phone company Oi SA climbed 8.8 percent to 3.97 reais in its second day of advances.
CPFL Energias Renovaveis SA, South America’s biggest owner of wind farms, fell 3.9 percent to 12.02 reais in its first day of trading after saying on July 17 that it’s raising at least 900 million reais by selling shares at 12.51 reais each in an initial public offering.
The Ibovespa trades at 11.9 times analysts’ earnings estimates for the next four quarters, compared with 10.3 for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume for stocks in Sao Paulo was 4.38 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.78 billion reais this year through July 17, according to data compiled by the exchange.