The Ibovespa extended its biggest monthly drop since June as Vale SA slumped on concern that growth is slowing in China, Brazil’s biggest trading partner.
Vale, the world’s largest iron-ore producer, contributed the most to the gauge’s decline. Clothing manufacturer and retailer Cia. Hering led losses by companies depending on domestic demand amid speculation that the central bank will increase borrowing costs as a weaker real fuels inflation.
The Ibovespa declined 0.3 percent to 47,116.65 at 10:33 a.m. in Sao Paulo, extending the monthly drop to 8.5 percent. Forty-five of its 72 member stocks fell today. The real weakened 0.6 percent to 2.4251 per dollar. The Standard & Poor’s GSCI index of 24 raw materials sank 0.6 percent. Commodity producers account for 34 percent of the Ibovespa’s weighting.
“There’s a lot of fear that China is slowing down, which is very negative for all emerging markets,” Pedro Galdi, the chief analyst at SLW Corretora in Sao Paulo, said in a telephone interview. “Vale, for instance, depends a lot on the sales to China.”
China’s manufacturing contracted in January for the first time in six months, HSBC Holdings Plc and Markit Economics Ltd.’s purchasing managers’ index indicated this week.
Vale declined 0.7 percent to 29.56 reais today. Hering fell 1.8 percent to 26.66 reais.
The Ibovespa has tumbled 17 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 5.8 billion reais yesterday, compared with a daily average of 6.2 billion reais this month, according to data from the exchange.