2011 Not a Good Year for Brazil’s Stocks: 18% Down

Bovespa, Brazil's stock market In spite of a slight gain in the last trading day of 2011 the Brazilian stocks benchmark index, the Ibovespa, experienced an 18.1% decline in the twelve months of last year on concerns that Europe’s debt troubles could lead to another global recession. 

The benchmark Ibovespa stock index closed on Thursday 30 December at 56,754 points, a 0.39% gain from the day before Wednesday’s close of 56,534 points. The index had ended 2010 at 69,305 points.

In Brazil, a price index showed a slowdown in inflation, giving policy makers room to continue cutting rates and reducing taxes to stimulate growth. But despite a drop in the IGP-M price index in December, the reading for the year stood at 5.1%.

“Throughout the year we were rudderless, as money managers, economists and the government were not really able to determine what the outlook would be” said Reinaldo Zakalski, director of BI Asset Management in Sao Paulo, adding that the uncertainty made investors reluctant to buy stocks.

“Add to that the weakness of the US economy, overseas investors fleeing, European bank problems and you have the strong retraction in stocks that we saw. Next year I see much of the same until we have more clarity about Europe.”

The tone of caution for investors in Brazil was mirrored in this year’s good performance by more defensive industries, such as phone companies and utilities, as well as makers of reliable consumer items, such as cigarettes and alcoholic beverages, compared with a decline in more capital-intensive industries that rely on robust growth, such as home builders and airlines.

Telephone company Tim Participações (TIMP3.BR) jumped close to 40% this year, while utility Cia Energética de Minas Gerais (CMIG4.BR) added more than a quarter, placing them among the 10 most profitable stock investments in Latin America this year, according to the Economatica consulting firm.

Tobacco company Souza Cruz (CRUZ3.BR) and Cia de Bebidas das Americas (AMBV4.BR), or AmBev, as the region’s biggest brewer is known, both jumped close to 30%.

While consumer growth was a concern for many overseas economies, the relative strength of Brazil’s domestic demand, as its middle class grows, helped lift credit- and debit-card processors Cielo (CIEL3.BR) and Redecard (RDCD3.BR).

Real estate developer Gafisa SA (GFSA3.BR) was among the biggest decliners on the Sao Paulo exchange this year, losing close to two-thirds of its value.

Other big decliners were low-cost airline Gol Linhas Aéreas Inteligentes (GOLL4.BR) and steelmakers Usinas Siderúrgicas de Minas Gerais (USIM5.BR) and Cia Siderúrgica Nacional (CSNA3.BR), which fell more than 40% each.

Mercopress

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Is More Concerned with World Cup and Olympics than the Survival of Many

Recently, while visiting the Tunisian immigrants impeded from entering France, presidential candidate Marine Le ...

With and Eye to World Cup and Olympics Brazil Launches Global Tourism Campaign

Embratur, the Brazilian Tourism Corporation, is starting an international campaign to promote tourism in ...

Brazil’s Trade Balance Starts May US$ 174 Million in the Red

In Brazil, May started with a deficit in the balance of trade (exports minus ...

Brazil and Colombia Unite Against Drug Dealers and FARC Terrorists

Brazil and Colombia agreed on a cooperation and defense agreement aimed at controlling the ...

Bush and Lula shake hands in São Paulo, Brazil

For Brazil’s Lula, US, EU and Poor Are All in the Way of Global Trade Pact

The presidents of Brazil, Luiz Inácio Lula da Silva, and of the United States, ...

LETTERS

Debate Goes OnBy Brazzil Magazine I’m really looking forward to getting your magazine. I ...

Mired in Scandal, Brazil’s Lula Offers Ministries to New Allies

Scandal shocked Brazilian President Luiz Inácio Lula da Silva announced Thursday a new plan ...

Brazil: 9 Months of Lula and No Birth to Celebrate

Brazilian President Lula thinks that words are a substitute for actions. He just said ...

Can Lula End Hunger?

John FitzpatrickBy John Fitzpatrick The beaming, benevolent face of Luiz Inácio Lula da Silva ...

Plan: No More Dollar in Deals Between Brazil and Mercosur Partners

The chiefs of state of Mercosur will consider this week during the summit in ...