July 24 (Bloomberg) -- The Ibovespa retreated from a one-month high after a report showed manufacturing declined in China, spurring concern that economic growth in Brazil’s top trading partner is faltering.
MMX Mineracao & Metalicos SA, billionaire Eike Batista’s mining company, was the worst performer on the benchmark gauge. JBS SA, the world’s largest beef producer, dropped the most in five weeks. Telefonica Brasil SA fell after second-quarter earnings missed estimates. Gafisa SA led homebuilders lower after data showed that Brazil’s unemployment rate unexpectedly increased in June.
The Ibovespa slid 0.9 percent to 48,374.23 at the close of trading in Sao Paulo, snapping a two-day advance. Three stocks fell for each one that rose. The real depreciated 1.6 percent to 2.2501 per dollar at 5:28 p.m. local time. China’s stocks fell after the preliminary reading of 47.7 for the purchasing managers’ index released by HSBC Holdings Plc and Markit Economics missed the 48.2 median forecast among 19 economists surveyed by Bloomberg.
“China’s PMI came in weak, and that’s pushing the Ibovespa lower,” Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a phone interview. “Brazil depends a lot on commodity exports to China.”
MMX retreated 9.6 percent to 1.51 reais. JBS slumped 4.1 percent to 6.60 reais. Commodities producers account for about 38 percent of the Ibovespa’s weighting.
Telefonica Brasil declined 2.3 percent to 48.49 reais. The company, whose mobile-phone unit is Brazil’s largest carrier by market share, posted adjusted net income of 914.3 million reais in the second quarter, trailing the average estimate of 967.2 million reais among nine analysts surveyed by Bloomberg.
Gafisa fell 4.5 percent to 2.96 reais. Brazil’s unemployment rate rose to 6 percent in June from 5.8 percent in the previous month, the statistics agency reported today. The median forecast of 27 economists surveyed by Bloomberg was 5.8 percent.
“Brazil remains out of favor given weak earnings momentum and stagnant economic data,” Mirae Asset Global Investments’ analysts, including New York-based Young Kim, wrote in a note to clients.
The Ibovespa slumped 20 percent this year through yesterday, wiping out $205 billion from the value of Brazilian equities, according to data compiled by Bloomberg. Brazil’s main equity index trades at 12.2 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume for stocks in Sao Paulo was 5.54 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.7 billion reais this year through July 22, according to data compiled by the exchange.
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