Batista Selloff Sends Bovespa to Worst Annual Start Since 1995Ney Hayashi
The Bovespa index is posting its worst start to a year since 1995 as billionaire Eike Batista’s companies plunged, leading a tumble in commodity producers, amid concern they’re losing access to the financing they need.
Batista’s iron-ore producer MMX Mineracao & Metalicos SA and oil company OGX Petroleo & Gas Participacoes SA were the biggest losers on the gauge in the first quarter as each fell more than 47 percent. Vale SA, the world’s biggest iron-ore producer, had its biggest quarterly decline since the three months ended in June 2010 as prices for steel fell.
The Bovespa dropped 7.5 percent from January through March in Sao Paulo, the biggest first-quarter decline since a 32 percent plunge at the beginning of 1995, when the central bank increased borrowing costs to curb hyperinflation. Brazil’s benchmark index, which rose 0.6 percent to 56,352.09 today, is the fifth-worst performer this year among 94 major equity gauges tracked by Bloomberg.
“It hasn’t been a good quarter for the stock market for a lot of different reasons, such as the weak performance by OGX and other companies owned by Eike,” Joao Pedro Brugger, who helps oversee 220 million reais at Leme Investimentos Ltda., said in a phone interview from Florianopolis, Brazil. “It’s hard to be optimistic about the Bovespa.”
MMX fell 4.7 percent to 2.21 reais today, extending its quarterly decline to 50 percent. OGX lost 3.3 percent to 2.31 reais, extending its quarterly slump to 47 percent. Shares in Batista’s public companies declined as much as 85 percent in the past year after OGX cut oil output targets, erasing more than $25 billion of his personal fortune.
The Brazilian billionaire is giving up control of power generator MPX Energia SA after shares slumped 27 percent in the past year. EON SE, Germany’s biggest utility, will share management decisions with Batista after it acquires 25 percent of MPX’s shares from him for as much as 11 reais each, or a total of 1.56 billion reais, according to a statement today from the Rio de Janeiro-based company.
Vale dropped 1.2 percent to 33.24 reais, extending its quarterly decline to 19 percent, the biggest since a 23 percent plunge in the second quarter of 2010.
The Standard & Poor’s GSCI index of 24 raw materials lost 0.4 percent after a report showed jobless claims in the U.S. increased more than forecast. The real fell 0.5 percent to 2.0217 per dollar.
Beef producer Marfrig Alimentos SA was the worst performer on the gauge today after reporting a loss that was wider than forecast. Shares sank 5.2 percent to 8.44 reais after the company posted a net loss of 284.2 million reais in the fourth quarter, compared with an average estimate for an adjusted loss of 39.9 million reais among nine analysts surveyed by Bloomberg.
Some consumer stocks gained today after data from the national statistics agency showed that Brazil’s unemployment rate increased less than economists forecast in February. Cia. Brasileira de Distribuicao Grupo Pao de Acucar, the country’s biggest retailer, climbed 1.1 percent to 106.81 reais. Lojas Americanas SA added 0.3 percent to 17.40 reais.
While the job market is tight, investors are still worried about the outlook for the economy after growth slowed in 2012 for a second straight year to 0.9 percent.
“Growth last year was ridiculous, so everyone is waiting for some hard evidence that things are really going to be better this year,” Luciano Rostagno, the chief strategist at Banco WestLB do Brasil SA, said by phone from Sao Paulo.
Power utility Centrais Eletricas Brasileiras SA rallied 16 percent to 12.70 reais today, the most in four months, after announcing dividend payments and a plan to return to profitability.
The Bovespa has retreated 11 percent from this year’s high on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery and the government’s interventionist policies will hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 6.5 percent over the same period.
Brazil’s benchmark equity gauge trades at 11.4 times analysts’ earnings estimates for the next four quarters, compared with 10.8 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show. The Bovespa gained 7.4 percent in 2012.
Trading volume for stocks in Sao Paulo was 6.85 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.56 billion reais this year through March 26, according to data compiled by the exchange.