Brazil Stocks Extend Weekly Drop as Vale, Homebuilders Tumble

Updated on
  • Mining company Vale slumps for third day as metals decline
  • Real-estate shares fall on report of cuts in housing plan

The Ibovespa extended a weekly drop as mining company Vale SA tumbled and real-estate companies slumped after a report that the government may cut the number of units to be built under its housing program.

Vale was among the biggest contributors to the index’s slide on Friday amid lower metal prices. The BM&FBovespa Real Estate Index of 14 homebuilders posted its sixth consecutive decline, led by MRV Engenharia e Participacoes SA.

“There’s a lot of pressure coming from Vale, which fell quite a lot,” said Paulo Figueiredo, an economist at asset management firm FN Capital in Petropolis, Brazil. “And the construction sector is being affected by news about the housing program.”

Real-estate shares slumped after O Estado de S.Paulo newspaper said the government was scrapping a plan to build two million homes by 2018, an initiative sponsored by Dilma Rousseff, who stepped down from the presidency earlier this month to wait for a trial that may result in her impeachment. Newly-appointed Cities Minister Bruno Araujo issued a statement denying the report, saying that social programs are a priority for Acting President Michel Temer.

The Ibovespa lost 0.8 percent to 49,722.75 at the close of trading in Sao Paulo as 33 of its 59 stocks fell. Vale lost 3.8 percent. MRV retreated 4.5 percent. The benchmark index has dropped 4 percent this week following a global rout on concern that the Federal Reserve may raise interest rates as early as next month. The gauge is trading at 11.9 times estimated earnings, its cheapest since March 2.