Most Brazilian Stocks Drop as Santander Lowers Ibovespa Outlook

Most Brazilian stocks declined after Banco Santander SA lowered its forecast for the Ibovespa, citing slower economic growth and a weaker currency in Brazil.

Smiles SA, the frequent-flier unit of Brazilian airline Gol Linhas Aereas Inteligentes SA, tumbled to a three-week low after Santander removed the stock from its recommended list. Card-payment processor Cielo SA slid for a third day after reporting net income that missed analysts’ estimates. Cia. Siderurgica Nacional SA led gains by steelmakers after unexpectedly posting a profit in the second quarter.

The Ibovespa equity benchmark gained less than 0.1 percent to 47,446.71 at the close of trading Sao Paulo with 43 stocks lower and 27 higher. The gauge posted its biggest one-day loss in three weeks yesterday as speculation mounted that the U.S. Federal Reserve would soon reduce its monetary stimulus.

“At least until the end of the year, we’ll probably still see a negative sentiment toward Brazilian equities,” Roberto Altenhofen, a Sao Paulo-based analyst at consulting firm Empiricus Research, said in a telephone interview. “The Ibovespa’s underperformance has been caused by domestic issues such as weak economic growth, and now on top of that there’s the concern about the Fed’s stance.”

Brazil’s gross domestic product will expand 2 percent this year, down from a previous 3 percent forecast, Santander analysts Daniel Gewehr and Joao Noronha wrote in a report today. The real will trade from 2.30 per dollar to 2.45 per dollar in the next two years, they projected.

Cielo Decline

In the U.S., stocks fell today after Cleveland Fed President Sandra Pianalto said that a tapering of the central bank’s stimulus may be warranted if the labor market continues to strengthen.

Cielo slipped 1.3 percent to 54.80 reais. Smiles lost 3.5 percent to 24.50 reais.

CSN, as Siderurgica Nacional is also known, gained 3.4 percent to 6.70 reais. The steelmaker posted adjusted net income of 494.5 million reais in the second quarter, compared with the 97.2 million reais average adjusted net loss estimated by analysts surveyed by Bloomberg.

The real fell 0.7 percent to 2.3152 per U.S. dollar at 5:45 p.m. local time.

The Ibovespa slumped 22 percent this year through yesterday, wiping out $257 billion from the value of Brazilian stocks, according to data compiled by Bloomberg. Brazil’s benchmark equity gauge trades at 11.6 times analysts’ earnings estimates for the next four quarters, compared with 10.2 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume in Sao Paulo was 6.13 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.59 billion reais this year through Aug. 5, according to data compiled by the exchange.

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