EMERGING MARKETS-Brazil stocks slump to 8-month low as OGX dives

Thu Apr 4, 2013 7:43pm EDT

Related Topics

* Batista's OGX tumbles to record low on credit downgrade
    * Brazil court postpones decision on foreign tax case
    * Bovespa falls 1.65 pct, Mexico IPC down 0.35 pct


    By Roberta Vilas Boas
    SAO PAULO, April 4 (Reuters) - Brazilian stocks slumped to a
more than eight-month low on Thursday as billionaire Eike
Batista's oil firm OGX tumbled to a record low after a credit
downgrade and global iron miner Vale dropped due to uncertainty
about a looming tax ruling.
    Brazil's Bovespa index fell to its cheapest since
July, shedding 1.65 percent to 54,648, and leaving the index
clinging to a key support level. Low prices may draw in bargain
hunters but a break lower on strong volume could point to a
further steep drop.
    Shares in OGX sank 10.8 percent to its lowest
closing price since its market debut in 2008 after Standard &
Poor's late on Wednesday lowered its credit rating of OGX from
"B" to "B-" with a negative outlook. 
    "Production delays and higher costs should keep credit
metrics weak for the next two years," S&P analysts said, noting
the firm did not have big debt payments due till 2018, but that
it would likely exhaust its current cash holdings during 2013.
    OGX stock has collapsed more than 90 percent from a record
high in October 2010.
    Shares in Vale SA fell 3.98 percent after
Brazil's Supreme Court postponed a ruling on a more than $15
billion tax claim against its foreign profits. The stock had
surged 6 percent in the previous session on bets of a favorable
ruling, but the court postponed its decision late Wednesday.
 
    "We will continue to see volatility in the shares until we
have a firm decision on the case," said Ricardo Zeno, a partner
with brokerage AZ Investimentos in Rio de Janeiro.
    The ruling will also impact other multinationals such as
steelmaker Cia Siderurgica Nacional, which lost more
than 3 percent.
    The Bovespa is down more than 10 percent so far this year on
worries about sluggish growth in Latin America's top economy.
Investors are concerned by an array of government stimulus
measures that have so far failed to jump start growth while
inflation is rising. 
    Chart watchers said a break of the 54,600 level on strong
volume could point to a further steep drop for the Bovespa.
Volume on Thursday rose to its highest in three weeks. 
    Mexico's IPC index slipped 0.35 percent to 43,566.69
points as billionaire Carlos Slim's bank Inbursa 
lost 3.74 percent while rival bank Banorte added
1.11 percent.
    Stocks fell after an unexpected jump in U.S. weekly jobless
claims raised doubts about the labor market's recovery in the
United States, Mexico's top trading partner.
    In dollar terms, the IPC is trading near record highs after
a surge of investment on bets that the new government will push
long-stalled economic reforms through the country's divided
Congress. Given global demand for Mexican assets, analysts are
recommending investors look at stocks that are not part of the
IPC. Off-index stocks have received less flows and are not
trading at such high prices. 
    Chile's IPSA index fell 0.46 percent to its lowest
since late December as shares of retailer Falabella 
lost more than 1 percent.

    Latin America's key stock indexes at 2200 GMT:
 Stock indexes                     daily  year-t
                     Latest            %  o-date
                                  change       %
                                          change
 MSCI LatAm             3,733.80   -0.86   -1.69
                                          
                                          
 Brazil Bovespa        54,648.15   -1.65  -10.34
                                          
 Mexico IPC            43,566.69   -0.35   -0.32
                                          
 Chile IPSA             4,327.15   -0.46    0.60
                                          
 Chile IGPA            21,266.45   -0.47    0.93
                                          
 Argentina MerVal       3,297.13   -0.26   15.51
                                          
 Colombia IGBC         13,805.18    0.63    9.00
                                          
 Peru IGRA             19,608.48     0.3   -4.95
                                          
 Venezuela IBC        632,736.88    0.08   34.21
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