Brazilian Stocks Tumble as China Concern Pushes Producers Lower

Brazilian stocks tumbled for a second day as raw-material exporters dropped on concern a slowdown in China will curb demand.

Gauges of energy and materials shares fell at least 2.3 percent. Oil producer OGX Petroleo & Gas Participacoes SA was the worst performer on the Bovespa index as Deutsche Bank AG cut its price target on the stock. Mining companies Vale SA and MMX Mineracao e Metalicos SA slumped as iron-ore prices declined. Medical diagnostics company Diagnosticos da America SA slid before reporting quarterly earnings.

The Bovespa declined 0.7 percent to 56,499.17 at the close of trading in Sao Paulo. The index has dropped 7.3 percent this year on concern faster inflation will curb Brazil’s economic recovery and the government’s interventionist policies may hurt profits in industries including utilities and energy. Chinese stocks fell today as the government ordered more measures to curb property prices and a report indicated that service industry growth slowed.

“The main news is coming from China as the measures aimed to cool the real-estate sector renew concern about the outlook for growth,” Gustavo Mendonca, an economist at Oren Investimentos, said by phone from Rio de Janeiro. “That’s always a big issue for Brazil as some of the biggest companies on the Bovespa index are commodities exporters.”

OGX fell 4.6 percent to 2.90 reais. Vale slid 3.4 percent to 34.05 reais. MMX dropped 1.9 percent to 3.09 reais.

Commodities producers account for about 43 percent of the Bovespa index’s weighting. Forty stocks retreated on the benchmark today while 29 advanced.

China Growth

China called for higher down payments and interest rates for second-home mortgages in cities with “excessively fast” price increases and ordered stricter enforcement of taxes on sales as authorities step up a three-year campaign to cool the property market. A report from the National Bureau of Statistics and China Federation of Logistics and Purchasing showed the country’s services industries expanded last month at the slowest pace since September.

“Investors are concerned about the perspectives for China’s growth today,” Sandro Fernandes, a trader at brokerage Corval, said by phone from Belo Horizonte, Brazil. “Besides that, earnings that companies have reported have been disappointing. So nobody has a reason to buy stocks in the Brazilian market at this moment.”

Eighteen of 28 companies on the Bovespa index that have already reported fourth-quarter earnings trailed analysts’ estimates, according to data compiled by Bloomberg.

Dasa Drops

Dasa, as Diagnosticos da America is also known, declined 1.9 percent to 13.01 reais, the lowest since Dec. 14. The company will report quarterly earnings after the close of trading today. Adjusted net income fell 78 percent to 15.8 million reais in the fourth quarter of 2012, according to the average estimate of seven analysts surveyed by Bloomberg.

LLX Logistica SA jumped 11 percent to 2.17 reais, the biggest one day advance since Nov. 29. Trading volume was 2.5 times the three-month daily average, data compiled by Bloomberg show.

Brazil’s benchmark equity gauge trades at 11.6 times analysts’ earnings estimates for the next four quarters, compared with 10.4 for the MSCI Emerging Markets Index of 21 developing nations’ equities, according to data compiled by Bloomberg.

Trading volume for stocks in Sao Paulo was 6.66 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.6 billion reais this year through March 1, according to data compiled by the exchange.

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