Ibovespa Retreats as OGX Decline Outweighs Consumer Stock Gains

The Ibovespa fell for a third session as OGX Petroleo e Gas Participacoes SA sank after Valor Economico reported that it missed a bond payment, outweighing gains in consumer stocks including retailer Cia. Hering.

OGX, the oil company founded by Eike Batista, contributed the most to the index’s decline. Retailers and real estate companies advanced, with homebuilder PDG Realty SA Empreendimentos e Participacoes and shopping mall owner BR Malls Participacoes SA trading higher, after a report showed Brazil’s unemployment rate unexpectedly fell in August.

The Ibovespa dropped 0.9 percent to 53,782.97 at the close of trading in Sao Paulo, with 38 stocks lower and 33 higher. Trading volume for the index’s members was 27 percent higher than the average for the past 10 days. The real depreciated 0.6 percent to 2.2455 per U.S. dollar at 5:24 p.m. local time.

“The unemployment figures help to boost consumer stocks, as they signal that the outlook for Brazil’s economic activity may not be as bad as we thought,” Luis Gustavo Pereira, the head strategist at Futura Corretora brokerage, said in a telephone interview from Sao Paulo. “With OGX on the Ibovespa, however, the index doesn’t really capture what’s going on in the Brazilian market. It distorts things.”

OGX, the fourth-heaviest-weighted stock on Brazil’s benchmark stock measure, fell 16 percent to 31 centavos after touching a record-low 29 centavos. The company missed a payment on a local bond yesterday and may miss on a dollar bond next week, Valor Economico reported, without saying where it got the information. An OGX press official declined to comment.

Brazil Unemployment

“If it weren’t for OGX, the Ibovespa would be little changed, or maybe falling a little,” Fausto Gouveia, who helps manage 500 million reais of assets at Legan Administracao, said in a phone interview from Sao Paulo. “There isn’t any news about Brazil in general to justify a drop this big.”

BM&FBovespa said on Sept. 11 that it will exclude companies whose shares trade for less than 1 real from the Ibovespa starting in January. OGX is currently the only member of the measure trading below this threshold.

Brazil’s unemployment rate fell to 5.3 percent in August, matching the lowest level for the month, the national statistics agency reported today. Economists surveyed by Bloomberg had projected it would hold at 5.6 percent.

Hering added 1 percent to 34.48 reais. PDG Realty gained 0.8 percent to 2.50 reais. BR Malls increased 0.4 percent to 20.62 reais.

Cia. de Bebidas das Americas, the brewer known as AmBev, climbed 1.2 percent to 87.51 reais after Credit Suisse Group AG raised its recommendation to the equivalent of buy. Steelmaker Cia. Siderurgica Nacional SA rose 3.1 percent to 9.74 reais, following metals higher.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 19 percent in dollar terms this year, compared with a decline of 5 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

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