Cia. Hering, the Brazilian clothing retailer founded in 1880, slumped with the Ibovespa on speculation higher borrowing costs will dim prospects for consumer companies in Latin America’s largest economy.
The shares extended this year’s plunge to 35 percent, sending Brazil’s stock gauge to the biggest slide among major benchmarks in the Americas, after policy makers lifted interest rates to the highest level since 2009. The central bank is trying to tame a surge in inflation at a time when the economy is poised for the worst contraction in 25 years.
“It’s becoming clear that the government has chosen to curb inflation first instead of boosting the economy,” Ari Santos, a trader at brokerage H.Commcor, said by phone from Sao Paulo. “In this scenario, there’s certainly room for further losses in the Ibovespa.”
Brazilian equities have slumped 8.8 percent from this year’s high as the economic slowdown added to concern the nation would lose its investment-grade credit rating. Policy makers raised the benchmark rate by a half percentage point to 13.75 percent Wednesday. Still, analysts surveyed by the central bank project consumer prices will exceed the upper limit of the government’s target range for the first time since 2003.
The Ibovespa lost 1 percent to 52,973.38 at the close of trading in Sao Paulo, trimming this week’s advance to 0.4 percent. The real retreated 0.6 percent to 3.1520 per dollar as of 5:25 p.m. local time. Brazilian markets were closed on Thursday for a holiday.
Hering was among the Ibovespa companies whose earnings trailed analysts’ estimates in the first three months of 2015, according to data compiled by Bloomberg. On average, profits dropped by 25 percent during that period.
Shares of Hering slid 5.1 percent Friday, and are on pace for the worst annual decline since 2004. The clothing retailer founded by German brothers Hermann and Bruno Hering gets 98 percent of its revenue from Brazil. It had 825 stores in the first quarter.
Usinas Siderurgicas de Minas Gerais SA sank to the lowest level in seven weeks. Shareholders Nippon Steel & Sumitomo Metal Corp. and Ternium SA are considering splitting the steelmaker, Exame magazine reported, without saying where it got the information.
Losses on the Ibovespa were limited as a drop in the real boosted exporters. Food company BRF SA, which gets almost half of its sales abroad, jumped to a three-month high.
FPC Par Corretora de Seguros SA rallied 13 percent in its trading debut after shareholders raised 602.8 million reais ($189.2 million) in an initial public offering.
Trading volume of equities in Sao Paulo was 6.16 billion reais Friday, according to data compiled by Bloomberg. That compares with a daily average of 6.98 billion reais, according to the exchange.