Brazilian Stocks Slip on Growth Concern; Bolsa, Ipsa Advance

By Alexander Ragir

Dec. 17 (Bloomberg) -- Brazilian stocks fell for a second day this week on concern that earnings forecasts may need to be reduced further as the economy weakens and the currency slumps.

Net Servicos de Comunicacao SA, the biggest cable-TV company, slid 4.6 percent after JPMorgan Chase & Co. said its fourth-quarter profit may be hurt by the weaker real. Vivo Participacoes SA and Tim Participacoes SA led declines for phone stocks as Brascan Corretora said they lost market share last month. Cosan SA Industria e Comercio and Cia Siderurgica Nacional SA advanced more than 3 percent as sugar and metals gained on the dollar’s plunge against the euro.

“The market has been pretty light, with a lot of rotation between sectors but not much flows in and out of the market,” said Julio Martins, who oversees $173 million as investment director at Banco Prosper in Rio de Janeiro. “This fight between sectors is what you’re seeing in the market.”

The Bovespa Index bounced between gains and losses, dropping 0.1 percent to 39,947.43. More than two stocks fell for every one that rose. Mexico’s Bolsa index jumped 2.1 percent to the highest in 10 weeks. Chile’s Ipsa gained 0.5 percent.

Net slid 49 centavos to 14.31 reais after JPMorgan said the company may report a foreign exchange loss of 166 million reais because of unhedged debt. Deutsche Bank AG cut its forecast for the American depositary receipts to $9 from $11.

The Brazilian real slipped 2.1 percent to 2.3623 reais per dollar. The real, which has lost 19.5 percent in the last three months, is the worst performing of the 16 most-traded currencies tracked by Bloomberg.

The dollar declined the most against the euro since the 15- nation currency’s 1999 debut and sank to a 13-year low versus the yen after the Federal Reserve cut its target lending rate to as low as zero.

Commodities Gain

Cosan, the world’s second-biggest sugarcane processor, rose 3.7 percent to 11.20 reais. CSN, as Brazil’s third-largest steelmaker is known, climbed 3.4 percent to 31.43 reais. Sugar prices rose for the second straight day. The Bloomberg Base Metals 3-Month Price Commodity Index advanced 0.7 percent.

Brazil earnings may slide 23 percent in 2009 as growth in the region’s largest economy slows to a forecast 2.2 percent from the previous 3 percent estimate, Citigroup Inc. said Dec. 11.

Deutsche Bank today cut its growth estimate for Brazil to 2.2 percent in 2009 from the previous estimate of 2.9 percent.

Phone stocks fell the most in the MSCI Brazil Index, losing 3.7 percent. Vivo, Brazil’s biggest mobile-phone company, and Tim, the third-largest, retreated after losing market share in November, Anatel data showed.

‘Tougher’ Competition

The increase in customer additions for the industry as a whole signals that competition for customers “is even tougher” and could lead to lower profitability in the fourth quarter, Brascan analyst Beatriz Battelli wrote in a note to clients.

Vivo slid 5.9 percent to 31.70 reais and Tim fell 3.6 percent to 3.75 reais.

Positivo Informatica SA, Brazil’s biggest computer maker, fell the most since shares began trading in 2006 on a report that Lenovo Group Ltd. won’t pursue a bid for the company.

Lenovo has decided not to pursue its bid for Positivo “for now” after considering a possible purchase, the Wall Street Journal reported, citing an unidentified person. An opportunity had previously existed for Lenovo to buy the Brazilian company, the Journal quoted the person as saying.

“The stock rose sharply and now it’s suffering from people questioning whether a deal will going to go through, and if it does, how long it will take,” said Martins.

Positivo tumbled 26 percent to 8.14 reais.

Bolsa Gains

In Mexico, the Bolsa gained for a second day.

Telefonos de Mexico SAB rose to a 15-year high as Banco Santander SA said the phone company’s forecast for capital spending reflects an “optimistic view” of its business next year.

Telmex, as the country’s biggest land-line phone company is known, advanced 4.7 percent to 14.65 pesos.

Homebuilders surged on bets Mexico’s central bank may cut rates, following the Federal Reserve’s interest-rate cut. Consorcio Ara SAB, the country’s fourth-largest homebuilder, increased 12 percent to 5.50 pesos on speculation rate reductions in Mexico could spur home sales on credit.

Elsewhere in Latin America, Argentina’s Merval rose 0.4 percent, Peru’s Lima General slipped 0.5 percent and Colombia’s IGBC declined 0.8 percent.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;