Brazil's Ibovespa Posts Third Annual Loss as Commodities Fall

  • Index poised to extend the longest losing streak since 2002
  • Gauge of commodity producers extend 2015 drop to 48 percent

Brazil’s Ibovespa declined as commodity prices dropped, extending its third straight annual loss, the longest losing streak since 2002.

Petrochemicals group Braskem SA and the steelmaker known as CSN fell the most on MSCI’s gauge for raw-material producers, which slumped 48 percent this year, the worst annual performance since 2008. Commodity stocks account for about 25 percent of the benchmark index’s weighting.

The Ibovespa has fallen 29 percent since the end of 2012 as a drop in prices for grains, metals and oil turned the real in the world’s worst performing major currency, helping to fuel inflation and spurring policy makers to boost interest rates even as the economy heads toward its longest recession since the 1930s. The last time the Ibovespa posted three consecutive annual decline, it lost 34 percent from the end of 1999 through 2002.

"It is a bad day for emerging markets and quite a symbolic end of the year for Brazil," said Vitor Suzaki, an analyst at brokerage Lerosa Investimentos. "It was year of a lot of bad news from politics to economics, and unfortunately the prospects for the near term are not good at all."

On top of the economic distress, Brazilian stocks have been battered by political turmoil that has distracted lawmakers from pursuing measures to shore up growth and the budget. When factoring in the decline in Brazil’s currency, the Ibovespa has plummeted 74 percent in dollar terms during the past five years. The index now trades at 10.1 times its forecast earnings, which compares with an average 11.1 times over the past three years.

Braskem dropped 4.4 percent to 27.62 reais for the biggest one-day loss since Aug. 18. Oil declined 3.1 percent after data showed an unexpected increase in U.S. inventories last week. The S&P GSCI Spot Index of raw materials fell 1.8 percent.

The Ibovespa lost 0.7 percent to 43,349.96 at the close of trading in Sao Paulo, leaving it down 3.8 percent this month and 13 percent this year. Companhia Siderurgica Nacional SA, known as CSN, fell 4.8 percent.

Log-In Logistica Intermodal SA surged 25 percent after Valor Economico newspaper reported the firm got a firm offer from an investor interested in acquiring control, without saying how it got the information. The company said in a Dec. 29 filing that it was considering a possible debt restructuring.

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