Bovespa Mulls 2014 Index Changes as Batista Whipsaws GaugeDenyse Godoy
BM&FBovespa SA, Latin America’s biggest exchange operator, is considering changes to its Ibovespa stock gauge after the sell-off in Eike Batista’s companies fueled volatility on Brazil’s benchmark index.
BM&FBovespa will announce any changes to the number of stocks on the index or their weighting by the end of September, Chief Executive Officer Edemir Pinto told reporters today in Sao Paulo. A committee of exchange executives and bank and brokerage-firm officials delivered a report last month suggesting changes to the methodology.
“The Ibovespa is 45 years old, and the number of companies on the market has increased so much over the years,” Pinto said. “The index should reflect the diversity of sectors of the Brazilian economy that are present on the exchange now.”
Shares of Batista’s oil producer OGX Petroleo e Gas Participacoes SA have tumbled 87 percent this year amid output shortfalls and dwindling cash, roiling the Ibovespa gauge. Three-month volatility on the index has more than doubled since mid-February to 27, making it the most erratic major benchmark in the Americas.
Under the current methodology, the company’s weighting on the index will increase to 4.4 percent in September from the current 2.1 percent, according to an Aug. 1 preview of changes.
Batista, who was the world’s eighth-richest person last year, has fallen out of the ranks of billionaires as his companies’ shares slumped.
OGX shares were little changed at 59 centavos as of 4:06 p.m. in Sao Paulo.