Ibovespa Falls to Two-Week Low as MRV Slumps on Growth ConcernNey Hayashi
The Ibovespa dropped to a two-week low as MRV Engenharia & Participacoes SA led homebuilders lower after economists cut forecasts for Brazil’s growth.
The BM&FBovespa Real Estate Index slumped the most in a week. Itau Unibanco Holding SA fell for a second day. State-controlled oil company Petroleo Brasileiro SA contributed the most to the benchmark equity gauge’s decline. Cia. Energetica de Minas Gerais slid after Banco BTG Pactual SA reduced its recommendation on the utility to the equivalent of hold.
The Ibovespa fell 0.8 percent to 54,210.05 at the close of trading in Sao Paulo, trimming this year’s gain to 5.3 percent. Brazil’s economy will grow 1.16 percent this year, according to the median of about 100 analysts’ estimates compiled by the central bank, down from 1.24 percent a week ago,
“Recent gains for the Ibovespa haven’t been supported by better economic fundamentals,” Alexandre Ghirghi, a portfolio manager at Metodo Investimentos, said by phone from Sao Paulo. “Equities have gained on the back of speculation that we may have changes in economic policies following the election in October. If there’s no change, stocks will slump.”
The benchmark equity gauge entered a bull market on May 7, surging 20 percent from this year’s low, as Petrobras, as Petroleo Brasileiro is known, rallied on speculation a change in government will reduce intervention in state-run companies.
Banco Santander SA said in a research report that it cut its growth forecast for Brazil’s gross domestic product in 2014 to 0.9 percent from 1.3 percent.
“The current plunge in both consumer and business confidence levels, plus the strong slowdown in credit market, high inventories level, rationing risks, and the marginally negative impulse from monetary and fiscal policy expected ahead, all combine to create downside risk to GDP growth in upcoming years,” the analysts wrote.
Petrobras fell 2.1 percent to 18.30 reais today. A poll last week showed that support for President Dilma Rousseff’s re-election bid ahead of the Oct. 5 vote was 39 percent, up from 38 percent previously.
Cemig lost 1.4 percent to 17.81 reais. MRV slipped 2.6 percent to 7.21 reais.