Bovespa Index Falls as Steelmakers’ Plunge Overshadows Inflation
Posted by adminJuly 19 (Bloomberg) — The Bovespa stock index fell for a fourth straight session as steelmakers plunged, offsetting a report that showed Brazilian consumer and wholesale prices declined this month, easing concern policy makers will take further measures to cool the economy.
Usinas Siderurgicas de Minas Gerais SA and Gerdau SA fell to their lowest intraday prices in more than two years. Homebuilder MRV Engenharia & Participacoes SA declined after reporting its contracted sales fell 1 percent in the second quarter.
The Bovespa dropped 0.2 percent to 58,731.03 at 11:56 a.m. New York time. Thirty-nine stocks tumbled on the index, while 24 rose. The real strengthened 0.4 percent to 1.5683 per U.S. dollar.
“Currency gains help to explain why the stocks have underperformed this year,” said Joao Pedro Brugger, who helps oversee 70 million reais ($45 million) at Leme Investimentos in Florianopolis, Brazil. “Steelmakers are facing increased competition from imported steel as the real strengthens.”
Gerdau tumbled 1.8 percent to 14.14 reais, the lowest intraday since April 2009. Usiminas fell 2.4 percent to 11.42 reais. It slumped 39 percent this year through yesterday, the fourth-worst performance on the Bovespa index.
The Bovespa earlier gained as much as 0.8 percent as prices as measured by the IGP-M inflation report declined 0.21 percent this month through July 18, according to the Rio de Janeiro- based Getulio Vargas Foundation. That compares with the median forecast of a 0.12 percent drop in a Bloomberg survey of 17 economists. Consumer and wholesale prices fell 0.11 percent and 0.38 percent respectively, according to the report. Construction prices rose 0.63 percent.
Unemployment
A separate report showed Brazil’s unemployment rate fell to its lowest since January. The jobless rate fell to 6.2 percent in June, from 6.4 percent in May and 7 percent a year earlier, according to data released today by the national statistics agency in Rio de Janeiro.
MRV declined 0.5 percent to 11.09 reais. The company reported second-quarter preliminary contracted sales of 968.5 million reais, 1 percent below the same period last year, according to a filing.
Brasil Brokers Participacoes rose as much as 1.4 percent, and LPS Brasil Consultoria de Imoveis SA gained 1.1 percent to 33.67 reais. Both real-estate brokers were rated “buy” in new coverage at Banco BTG Pactual SA.
The Bovespa is approaching a so-called bear market after falling 19 percent from a November peak through yesterday on concern that rising inflation may hurt domestic demand and a slowdown in global economic growth could weaken commodities.
Relative Value
The measure trades at 9.6 times analysts’ earnings estimates, the lowest since March 2009, according to weekly data compiled by Bloomberg. That compares to a ratio of 12.9 for the Shanghai Composite Index, 6.6 for Russia’s Micex and 14.9 times for India’s Bombay Stock Exchange Sensitive Index.
Traders moved 6 billion reais in stocks yesterday, data compiled by Bloomberg show. That compares to a daily average this year of 6.42 billion reais through July 6, according to data from the exchange.
–Editors: Richard Richtmyer, Marie-France Han
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