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Ibovespa Drops as China Outlook Sinks Exporters; Vale Declines

Jan. 23 (Bloomberg) -- The Ibovespa fell for the fifth time in six sessions as commodity exporters including iron-ore producer Vale SA dropped on concern manufacturing growth is slowing in China, Brazil’s biggest trading partner.

Steelmaker Cia. Siderurgica Nacional SA slumped for a fifth straight day in the longest losing streak since June. Airline Gol Linhas Aereas Inteligentes SA dropped after Raymond James Financial Inc. cut it to the equivalent of hold. Brookfield Incorporacoes SA rallied amid speculation the homebuilder buy back its outstanding shares and delist the stock.

The Ibovespa retreated 2 percent to 48,320.64 at the close of trading in Sao Paulo, with 63 of its 72 member stocks lower. The real dropped 1.3 percent to 2.4042 per U.S. dollar at 5:22 p.m. local time. A preliminary reading of China’s manufacturing gauge by HSBC Holdings Plc and Markit Economics indicated a surprise contraction in January.

“China’s data hit emerging stocks very hard, especially Brazil, because of its impact on commodities,” Fernando Goes, an analyst at Clear Corretora in Sao Paulo, said in a phone interview. “Equities are beginning to look attractive after recent losses, but China is weighing on the market today.”

Economic growth in China slowed in the fourth quarter and industrial output rose in December at the weakest pace in five months, separate reports showed this week.

Vale, whose top export market is China, declined 2.6 percent to 28.15 reais. CSN, as Cia. Siderurgica is known, lost 2.9 percent to 12.09 reais.

Rossi, Brookfield

Gol sank 4.6 percent to 10.94 reais.

Brazil’s main equity index earlier gained 0.6 percent after a report from the national statistics agency showed consumer prices rose 5.63 percent in the 12 months through mid-January, the slowest pace since October 2012. Homebuilder Rossi Residencial SA climbed 1 percent to 1.94 reais.

Brookfield jumped 19 percent to 1.32 reais, as trading volume surged to five times the three-month daily average. The homebuilder could buy back its stock and delist it from the country’s stock exchange, Brazilian website InfoMoney said, citing sources it didn’t name. Brookfield’s press office said the company doesn’t comment on market rumors when contacted by Bloomberg News.

The Ibovespa has tumbled 14 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

Trading volume of stocks in Sao Paulo was 6.91 billion reais today, data compiled by Bloomberg show. That compares with a daily average of 6.2 billion reais this month, according to data from the exchange.

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

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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