Photographer: Dado Galdieri/Bloomberg

Brazil Stocks Drop on Budget Concern as Trading Volume Plunges

  • Real estate company Multiplan falls the most on the Ibovespa
  • Trading on Ibovespa stocks falls 52% from 30-day average

Brazilian stocks declined amid a 52 percent dip in trading volume on Ibovespa companies after a report showed Latin America’s biggest economy posted its biggest primary budget deficit of the year in November.

Forty-seven of 63 stocks on the Ibovespa declined amid speculation Brazil’s finances are deteriorating. The nation’s stock market reopened Monday after being shut two days for the holiday season, which according to traders has reduced the amount of shares changing handing hands in the Sao Paulo exchange compared with a 30-day average.

“The economy keeps getting worse and worse, which ends up dragging markets down as well,” said Rogerio Freitas, a partner at Rio de Janeiro-based hedge fund Teorica Investimentos. “I don’t see things improving anytime soon.”

The Ibovespa lost 0.3 percent to 43,653.97 at the close of trading in Sao Paulo, extending this year’s decline to 13 percent. Real estate developer Multiplan Empreendimentos Imobiliarios SA sank 3.4 percent, the worst performer on the Ibovespa, and food company BRF SA dropped the most in seven weeks.

With Brazil sinking into its longest recession since 1930s, the Ibovespa heads toward its third straight year of losses as President Dilma Rousseff struggles to curb expenses and avoid further rating cuts. The country’s budget gap before interest payments --including states, cities and government-run companies-- was 19.6 billion reais ($5.1 billion) in November, compared to the median forecast of 14 analysts surveyed by Bloomberg for a 19.8 billion-real deficit.

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