Ibovespa Tumbles as Brazilian Exporters Decline on China Growth

The Ibovespa stock benchmark retreated as Brazilian raw-material producers declined amid renewed concern that growth will falter in China, the country’s biggest trading partner.

OGX Petroleo & Gas Participacoes SA, the oil producer controlled by billionaire Eike Batista, contributed most to the gauge’s decline as Brazil’s stock exchange increased the short-interest limit on the stock and as crude slid as much as 1.3 percent. Steelmaker Usinas Siderurgicas de Minas Gerais SA fell to an eight-month low. Brookfield Incorporacoes SA tumbled to the lowest since 2009 after the homebuilder reported a surprise first-quarter loss.

The Ibovespa dropped 0.6 percent to 55,447.56 at the close of trading in Sao Paulo. Forty stocks declined on the measure while 30 rose. The real weakened 0.4 percent to 2.0134 per dollar. The Bloomberg Base Metals 3-Month Price Commodity Index dropped 1 percent after a slump in China’s producer prices signaled growth may be weakening.

“The outlook for the world economy is still not very exciting, and this is a problem for companies that depend on commodities exports,” Joao Pedro Brugger, who helps manage 330 million reais at Leme Investimentos, said by phone from Florianopolis, Brasil. “In general, commodities producers don’t seem very attractive now.”

China’s producer price index slid 2.6 percent in April from a year earlier, figures from country’s statistics bureau showed today. That exceeded the 2.3 percent decline predicted by economists surveyed by Bloomberg.

OGX Shorts

OGX dropped 6.3 percent to 1.65 reais. BM&FBovespa SA, the operator of Brazil’s exchange, raised the short-interest limit on the stock to 45 percent from 30 percent effective yesterday. In a short sale, traders sell borrowed stock, anticipating the price will drop so they can profit by buying back shares at a lower price. Bets against the company soared to a record 33.5 percent of stock available for trading yesterday.

Usiminas, as Usinas Siderurgicas is also known, fell 3 percent to 8.96 reais. Commodities producers account for about 41 percent of the Ibovespa’s weighting.

Brookfield tumbled 7.1 percent to 1.95 reais. The company’s adjusted net loss was 47.7 million reais in the three months through March, according to data compiled by Bloomberg after the homebuilder released its earnings report late yesterday. The average estimate of six analysts was for a profit of 27.5 million-reais.

The Ibovespa rose as much as 0.5 percent earlier as retailers rallied after Lojas Renner SA reported first-quarter sales that exceeded analysts’ estimates. The clothing chain said in a regulatory filing late yesterday that sales rose 18 percent to 833.9 million reais, more than the average estimate of 809.8 million reais among 10 analysts surveyed by Bloomberg.

Renner Gains

“Renner’s results were very strong and that makes investors a little more optimistic,” Sandro Fernandes, a trader at brokerage Corval, said by phone from Belo Horizonte, Brazil. “But it is too early to say the economy” will pick up.

Renner rose 1.7 percent to 76.80 reais.

The Ibovespa has retreated 9 percent this year, the worst performer after Colombia’s IGBC index among 19 major emerging markets, according to data compiled by Bloomberg. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 0.3 percent over the same period.

Before it's here, it's on the Bloomberg Terminal.