The Brazilian Bovespa Index Plummets amidst Concern on Lower Economic Growth Forecast

The Bovespa Index, the benchmark stock index of Brazil has come down to a one-week low figure today. The economic growth forecast of Brazil for 2013 has been decreased by the analysts and hence, the investors were concerned that the sluggish economic recovery will have a negative impact on the corporate earnings.

The Bovespa experienced a slump of 0.8% today and ended at 62044.63. Out of the 69 stocks registered, 52 saw decrease, whereas the remaining 17 had better fate. According to the median forecast made by over 100 analysts of Brazil, the gross domestic product will increase by 3.26% in 2013. Incidentally, only a week earlier, the similar panel of analysts predicted a 3.3% growth for the Latin American country’s economy.

According to Futura Corretora’s analyst, Luis Gustavo Pereira, the investors are keen to witness some growth signs in the near future. However, for the time being, things don’t look good at all. Incidentally, in 2012, the Brazilian Government decided to cut taxes on some of the consumer goods and also the minimum reserve requirements for the banks. Its rate reduction was the biggest among the other members of the G-20.

Joao Pedro Brugger, the economist working for Leme Investimentos stated that the investors are expecting to see some actual improvements in the economic outlook of not only Brazil, but the entire world. Otherwise, in the 1st half of the New Year, good enough rally for the stocks cannot be expected.

The biggest cosmetics maker of Brazil, Natura Cosmeticos suffered its biggest 1-day decline within the last 4 months. Natura declined by 2.4% and finished at 58.34 reais per share. On the other hand, the securities clearing house Cetip SA Mercados Organizados also went down after HSBC Holdings announced its decision to lower the recommendation to the equivalent of hold. Currently, each share of Cetip costs 25.62 reais, as it declined by 1.6% today.

The Electric Energy index of Bovespa had a bad day as all the share prices went down except one. AES Tiete SA was probably the biggest loser as its share prices tumbled by 4.4% and is at 21.42 reais per share now. The investors are concerned as the water levels are low throughout the country’s hydropower dams and hence many feel that the Government may be compelled to ration electricity in 2013.