Brazilian Market Has Now Fallen 42% with No Relief in Sight

Brazilian stock market For the sixth day in a row the Brazilian markets continued their downhill trip. The Bovespa, Brazil's stock exchange, had a little bull phase this Thursday morning, October 9, gaining up to 4.5%, but this was before the Dow Jones slump, which ended up dropping 7.3%.

Following the US market debacle, Brazilian stocks went also south closing the day at 37.080 points, 3.92% down. The Ibovespa, the reference for the Brazilian stock market, now has fallen over 25% in the last six days and 41.96% this year.

Thanks to a series of interventions by Brazil's Central Bank, the US dollar, which had been feverishly zooming up in recent days lost some ground closing at 2.187 reais, 4.07 less than the previous day. 

In order to contain the dollar hike the Central Bank held an auction to sell the greenback at 10:35 am. At 12:45 pm the BC went ahead with the swap auction that had been scheduled the previous day.

The Bovespa traded 5.5 billion reais (US$ 2.5 billion) during the Thursday session. The biggest losers were companies linked to the construction sector such as Cyrela and Gafisa, while the Brazilian market's blue chips, mining company Vale and oil multinational Petrobras, lost 3.87% and 3.07% respectively.

On Wednesday, Latin American stocks and currencies fell during another day of volatile trading on fears of a global slowdown. Several central banks had to intervene to cool the demand for US dollars.

Brazil's stock market Ibovespa plunged 5.1% when trading opened, reversed and went into positive territory but then fell again. It was down 1.9% to 39,380. The real meantime lost as much as 10% against the US dollar before climbing back after the central bank sold 1.3 billion in three dollar auctions. It finally stabilized at 2.25 having reached earlier 2.50 to the greenback.

In Mexico, the stock exchange was up nearly two-thirds of a percent but the IPC index finally ended 0.99% down at 20.687. However the peso fell as low as 14 pesos but finally stabilized at 12.25 to the US dollars following the announced that the Central Bank would auction 2.5 billion US dollars in reserves to prop up the struggling currency.

The first day absorbed almost a billion US dollars, and the rest will be auctioned Thursday, but officials said that 400 million US dollars will be available on a daily basis.

Chile's IPSA fell 4,54% to 2.238,66 points and IGPA index lost 3,88% to 10.964,60. In the last five trading days IPSA has lost 21% totaling 26.6% in 2008.

Argentina's Merval index ended 1.82% down, with a loss of 15.35% in five trading days. The Merval stood at the end of the day at 1.359,27, the lowest since April 2005. The Argentine peso lost a couple of cents to the US dollar with modest intervention from the central bank.

Analysts say the market volatility could devastate Latin America's commodities-based economies. Chile's Codelco is the world's largest copper producer. Peru is the world's largest silver producer and a major supplier of copper, zinc and gold.

Brazil, with the region's largest economy, has been hit hardest because its equities were pumped up the most in recent years by foreign investment. Now foreign investors are dumping emerging market positions to reduce their risks.



  • Show Comments (8)

  • dnbaiacu

    On Ch.c
    πŸ˜‰ πŸ˜€ πŸ˜‰ πŸ˜€
    I WISH I could blog as well as he does.. HAVE the time for it. WHILE I watch my money in different parts of the world.. Sounds like he has a life to me. πŸ˜‰ His comments probably take an hour at the most out of his day .. IF he is the one even typing them out. And he gives his info for FREE. Info you could NEVER expect to get from BRAZIL> Heck , he needs to be HIRED by this magazine. Sometimes I wonder if in fact he does “work” for this mag? πŸ˜‰ πŸ™‚
    I admit,, Sometimes I go straight to comments without reading the preceding article JUST to hear what he has to say πŸ™‚ πŸ˜‰ πŸ™‚ πŸ˜‰ πŸ™‚

  • dnbaiacu

    No… Ch.c’s tone isn’t exactly “agradavel”. Actually it took time for “me” to get used to it. But we don’t expect all bloggers to “tickle our ears”. I have heard TRULY offensive things said in a very “SUBTLE” and “CORDIAL” way on THIS board. But you take it with a grain of salt. We ALL have issues. πŸ˜‰ πŸ™‚
    Some people DO stand to be corrected. And eventhough they may say some of the most crass things you’d be surprised just how many share their opinions.
    If someone hits on a “specific” issue that strikes a chord on the “actual topic” being discussed and a “counter opinion ” IS WARRANTED , hopefully and opponent will express his or her opinion.
    Ch.c’s obvious expertise is finance. He also promotes human rights (in his own way). The site IS about BRAZIL. And when it comes to it “Leaders”?????….Oh well,, let the facts speak for themselves. And just “who” elects them????…
    But the reality is , Brazil is really no worse than any other country. Developed countries are just more sophisticated in hiding their skeleltons. πŸ˜‰ None of the developed countries “DEVELOPED” without doing ” A WHOLE LOT OF UNIMAGINABLE DIRT”.
    So we listen to Ch.c spew and not take anything personal. If that’s how he wants to represent Switzerland…?????…oh well πŸ˜‰

  • dnbaiacu

    No ,,,Ch.c has a life
    This site is for English speakers and readers most of which surely have investments in Brazil. Ch.c just tells it like it is. Reality is brutal most times. At least for now on this planet. The brazilian and Lula conspire to create illusions. We need SOMEONE to help us see through it all. πŸ˜‰

  • Tradermom

    One ugly chart for sure…. there is no strong support insight. Minor support is 31.50 and Friday trading fell below that touching 31.27 and bounced to closed just blow the last support of 34.99. Better hope that 31.27 hold, other wise the next tiny inny support is 12.13, which can’t count as support… and if that doesn’t hold, it will go to $5 -$6 range and stay there for a while until confident are back and Brazil starts showing return on this investment. It might rally here and there, but rally will not hold…. Fear rules!!! Just when you think it is cheap, it can get cheaper. Don’t worry, you have a good support at $5 -$6 range and who know.. time will tell. I wouldn’t be buying here until there confirmation of bottom and stay above support. Good luck!!

  • João da Silva

    [quote]Heck , he needs to be HIRED by this magazine. [/quote]

    I beg to differ,Lad. He needs to set up his own magazine! A new product idea!!. Do you think he is the only one who knows about “Value Added Product” ?;-)

  • canadense

    No, he doesn’t
    Sorry friend, but many of his comments are hateful…in his thousands of comments he has never said one positive thing about Brazil…this is not telling it like it is because there are many great things in Brazil of which anyone who has spent significant time here knows.

    Does he show how it is in other countries? Does he ever talk about negatives of his own country? No.

    He also makes sweeping generalizations which shows ignorance. Brazilians are stupid, Brazilians are thieves. So, playing his game I can comfortably say all Swiss are boring. Is that fair?

    I’m very suprised anyone of any intelligence would take the time to stand up for him.

  • canadense

    would you pleeeaaase get a life! you sure put a ton of energy into bashing brazil…probably because life is so boring in Switzerland

  • ch.c.

    Brazil, with the region’s largest economy, has been hit hardest because its equities were pumped up THE MOSTin recent years by foreign investment.
    SO SURE for…….were pumped THE MOST in recent years ????????????????

    Soooooo wrong !

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