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Ibovespa Declines for Second Day on Export Outlook as Vale Sinks

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Nov. 21 (Bloomberg) -- The Ibovespa fell for a second session as slower manufacturing growth in China spurred concern expansion will falter in Brazil’s top trading partner and after U.S. policy makers said stimulus may be cut in coming months.

State-run Petroleo Brasileiro SA declined after it delayed by one week a board meeting on a new fuel price policy. Iron-ore producer Vale SA, whose main export market is China, sank. Developer BR Properties SA rallied after it agreed to sell some real estate assets for 3.18 billion reais ($1.38 billion).

The Ibovespa slid 0.7 percent to 52,688.02 at the close of trading in Sao Paulo, with 43 of its 72 member stocks lower. The real sank 1.3 percent to 2.3035 per dollar at 5:39 p.m. local time. Federal Reserve officials said they may reduce the $85 billion in monthly bond purchases “in coming months” as the economy improves, minutes of their most recent meeting show.

“The Fed left the door open to start cutting back on monetary stimulus as soon as December, which is weighing on the Ibovespa,” Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil SA in Sao Paulo, said in a phone interview. “Figures from China were also negative. Because of these two issues, the trend for the Ibovespa is negative.”

China’s preliminary reading for this month’s Purchasing Managers’ Index was 50.4, according to HSBC Holdings Plc and Markit Economics. That compared with a 50.8 median estimate from analysts surveyed by Bloomberg and a final number of 50.9 for October. Levels above 50 indicate expansion.

Vale lost 1.4 percent to 32.30 reais.

Petrobras Drop

Petrobras, as Petroleo Brasileiro is known, dropped 1 percent to 20.90 reais after falling as much as 3.4 percent. Chief Executive Officer Maria das Gracas Foster said in an Oct. 25 statement that she was seeking a fuel policy that brings local prices closer to international levels. The producer said in a separate statement the same day that its board would assess a new pricing methodology Nov. 22.

Petrobras said in a regulatory filing yesterday the board meeting was postponed to Nov. 29.

BR Properties jumped 7.6 percent to 19.33 reais, the biggest increase since May 2010. The company said in a regulatory filing it agreed to sell some properties to WTGoodman IBP Participacoes SA and will use the proceeds to pay debt, buy back shares and pay dividends.

The deal represents “great news” for BR Properties shareholders, Citigroup Inc. analyst Dan McGoey wrote in a research note to clients. “Investors should be highly pleased that management is taking what can now be considered a very aggressive stance to optimize its capital structure.”

PDG Falls

PDG Realty SA Empreendimentos & Participacoes tumbled 4.5 percent to 1.71 reais, leading homebuilders lower, as traders raised bets on higher borrowing costs in Brazil after a report showed unemployment unexpectedly dropped in October.

Brazil’s main equity index 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 23 percent in dollar terms this year, compared with a decline of 4.7 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 6.62 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.56 billion reais this year through Nov. 19, according to data from the exchange. The market was closed yesterday for a holiday.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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