Ibovespa Falls as Gafisa’s Loss Stokes Earnings Concern

The Ibovespa tumbled to a two-week low as homebuilder Gafisa SA plunged after reporting an unexpected quarterly loss, adding to evidence that Brazil’s sluggish economic expansion is eroding corporate profits.

Power utility Light SA led declines among utilities after it posted a first-quarter profit that trailed analysts’ estimates. Oil company HRT Participacoes em Petroleo SA tumbled after saying Milton Romeu Franke will replace Marcio Mello as chief executive officer.

The Ibovespa lost 1.2 percent to 54,447.77 at the close of trading in Sao Paulo, the lowest since April 26. Fifty-two of the 71 stocks on the gauge declined. Trading volume was 24 percent lower than the average of the previous 30 days, data compiled by Bloomberg show. The real strengthened 0.6 percent to 2.0080 per dollar.

“Earnings reports may be signaling that the impact of higher inflation and a slow recovery on the companies’ businesses is bigger than expected,” Alexandre Ghirghi, a portfolio manager at Metodo Investimentos, said by phone from Sao Paulo.

Economists covering Brazil forecast that growth will be 3 percent in 2013, according to a central bank survey released today. That compares with an estimate of 4 percent six months ago. Consumer prices as measured by the IPCA index increased 6.49 percent in the 12 months ending in April, faster than economists had forecast, a report from the national statistics agency showed on May 8.

Gafisa, HRT

Gafisa sank 5 percent to 4 reais. The company’s first-quarter adjusted net loss was 55.5 million reais, according to a regulatory filing. The average estimate of six analysts surveyed by Bloomberg was for adjusted net income of 10.8 million reais.

Twenty-six of the 45 companies on the Ibovespa that have already reported first-quarter earnings missed analysts estimates, according to data compiled by Bloomberg.

Light fell 3.8 percent to 18.70 reais.

HRT tumbled 17 percent to 3.80 reais, the worst performance on the BM&FBovespa Small Cap Index, as trading volume surged to 4.2 times the three-month daily average. Marcio Mello, who founded HRT as an oil-service company before transforming it into an oil and gas explorer, announced his resignation on May 10, after markets closed. Mello had stepped down as chairman of HRT April 4, after the company’s board split the position from the CEO position.

The Ibovespa has lost 11 percent this year, the most among 19 major emerging markets, according to data compiled by Bloomberg. Brazil’s benchmark equity gauge trades at 12.1 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.

Trading volume for stocks in Sao Paulo was 7.13 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.71 billion reais this year through April 30, according to data compiled by the exchange.

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