BM&FBovespa SA, Latin America’s biggest securities exchange, tumbled on wagers revenue will drop as investors drift away from Brazil’s markets after President Dilma Rousseff won her re-election bid.
Shares lost 2.2 percent to 10.42 reais in Sao Paulo trading. The benchmark Ibovespa index declined 2.8 percent to 50,503.66 as 52 of its 70 stocks retreated.
While BM&FBovespa could see an increase in trading volumes as investors adjust their portfolios after the election, the lack of clarity regarding Rousseff’s economic policies in her second term may reduce their interest in Brazil, according to Felipe Miranda, an analyst at equity research firm Empiricus.
“Rousseff’s interventionism and pressure over sectors such as lenders and power utilities have been very negative for the economy and companies’ shares, and hampered the development of the country’s financial market,” Miranda said in a phone interview. “As investors walk away from Brazilian stocks, the total capitalization of the market will decrease over time, trading volumes will fall and that will have a negative effect over BM&FBovespa’s revenue and shares.”
Daily average trading at BM&FBovespa fell to 6.6 billion reais ($2.6 billion) in the first half of this year after ending 2013 at 7.4 billion reais, data compiled by the exchange show.
The Ibovespa, Brazil’s benchmark stock gauge, rose as much as 38 percent in September from this year’s low in March on bets Rousseff would be voted out of office after overseeing the slowest growth for any presidency since 1992. The gauge has since then pared that gain to 12 percent as polls showed increasing support for the incumbent.
BM&FBovespa’s press office declined to comment.
This year’s adjusted earnings-per-share at the exchange will drop 7.6 percent to 78 centavos, according to the average of eight analysts estimates compiled by Bloomberg.
Daily volume at the BM&F segment slumped 38 percent in the three-month period ending June 30 while trading at the Bovespa division slid 19 percent.
Growth at Latin America’s largest economy will decelerate to 0.3 percent this year from 2.49 percent in 2013, according to the median estimate of economists surveyed by Bloomberg.