Brazil’s Stocks Decline to Lowest Since 2009 as Petrobras Sinks

January 15, 2016

Brazil’s stocks fell to the lowest since 2009 as raw-material producers including Petroleo Brasileiro SA followed commodities lower and consumer stocks tumbled amid estimates for a deeper contraction of Latin America’s largest economy.

Petrobras, as Petroleo Brasileiro is known, sank to the lowest since 2003. About 20 percent of the Ibovespa is made up of commodity companies, which have been battered by a drop in raw-material prices amid a slowdown of the nation’s top trading partner. Lender Banco Bradesco SA contributed the most to the Ibovespa’s drop, and online retailer B2W Cia. Digital was the worst performer on an MSCI gauge of companies that depend on the domestic demand.

Brazilian shares have joined a plunge in global stocks this year amid waning investor confidence in China’s efforts to revive its economy and stabilize financial markets. Traders have also pushed down the value of the Ibovespa on prospects the South American nation will post the worst recession since at least 1901 as the government struggles to shore up its finances and avoid further credit rating downgrades.

“Prospects for Brazilian stocks are discouraging in every way,” Hersz Ferman, an economist at brokerage Elite Corretora, said from Rio de Janeiro. “There are many uncertainties regarding both the internal and the external scenarios.”

The Ibovespa slipped 1.6 percent to 39,950.49 at the close of trading in Sao Paulo. Petrobras extended this year’s slide to 9.1 percent. Crude declined to a 12-year low. B2W fell 4.3 percent, and Bradesco lost 2.8 percent.

Economists covering Brazil forecast the country will contract 2.99 percent this year, according to a weekly survey by the central bank. That compares with a prior estimate of a gross domestic product decline of 2.95 percent.