Ibovespa Declines as OGX Plunges to Record on Bankruptcy Filing

The Ibovespa dropped for a second day as OGX Petroleo e Gas Participacoes SA tumbled to a record low after the oil company’s lawyer said he would file for bankruptcy protection today.

Port operator Santos Brasil Participacoes SA dropped to the lowest in three years after JPMorgan Chase & Co. cut its recommendation to the equivalent of hold. Steelmaker Usinas Siderurgicas de Minas Gerais SA was the best performer on the benchmark gauge after posting its first profit in seven quarters.

The Ibovespa declined 0.7 percent to 54,172.82 at the close of trading in Sao Paulo, with 39 of its 73 member stocks lower. The real lost 0.3 percent to 2.1914 per dollar at 5:35 p.m. local time, the most among major Latin American currencies as the Federal Reserve said it saw U.S. economic improvement, reviving speculation it will curtail a stimulus program that has buoyed emerging-market assets.

“The main issue weighing on the Ibovespa is once again OGX,” Alvaro Bandeira, a partner at Orama Asset Management, said in a telephone interview from Rio de Janeiro. “It’s not like things are great for the Ibovespa, but it isn’t as bad as today’s move shows.”

OGX, founded by the former Brazilian billionaire Eike Batista, sank 26 percent to 17 centavos, contributing the most to the Ibovespa’s decline. The company is filing for bankruptcy protection in Rio de Janeiro today, Batista’s lawyer Sergio Bermudes said by telephone.

Santos Brasil fell 7.4 percent to 20.70 reais. The company’s third-quarter earnings “disappointed” and spurred JPMorgan analysts Fernando Abdalla and Carlos Louro to cut their 2014 share price forecast to 29 reais from 36 reais, according to a research note to clients.

Usiminas Earnings

Usiminas, as Usinas Siderurgicas is known, gained 3.3 percent to 11.68 reais. While the steelmaker’s adjusted net income of 70.5 million reais trailed estimates, earnings before interest, taxes, depreciation and amortization, or Ebitda, of 403.8 million reais were more than analysts surveyed by Bloomberg had forecast.

Industrial machinery manufacturer Weg SA lost 0.2 percent to 29.10 reais after reporting third-quarter sales that missed analysts’ estimates.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 17 percent in dollar terms this year, compared with a decline of 1.3 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 7.05 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.61 billion reais this year through Oct. 22, according to the latest data available from the exchange.