Brazil's benchmark Ibovespa index tumbled nearly 6 per cent on Thursday -- its biggest one-day drop since November 2008 and its fourth-consecutive decline -- as investors ran for the exits on perceived risky trades amid a global markets rout.
Brazil's Ibovespa one-day chart
The index touched 52.628 points, its lowest level since June 2009, and it was the biggest loser among 18 major stock indices tracked by Bloomberg.
If it slides 10 per cent in one session, it will trigger BM&FBovespa's circuit breaker and trading will be halted. The breaker was last used in October 2008.
Here's a market snapshot:
Shares in MMX Mineração, a mining company controlled by billionaire businessman Eike Batista, were the worst performers on the Ibovespa. Only one stock, out of 66 index members, rose.
Michael Shaoul, chairman of Marketfield Asset Management, told FT Tilt he'd been recommending that investors sell shares in Brazil even before the latest plunge. According to Shaoul, the country's rising real interest rates and unsustainably high credit growth -- which have led to a deterioration in the quality of underwriting -- make the country unattractive.
He recommends reducing exposure to Brazil going forward. "You will get bounces in the brazilian equitiy market, and I think you should use those bounces to lighten positions," he said.
Ibovespa's worst performers
The Ibovespa entered a bear market last week, after dropping 20 per cent from a November 2010 peak. Year to date, it is down nearly 26 per cent.
The global sell-off also hit other Latin American exchanges. Argentina's Merval tumbled 6 per cent and Chile's IPSA index fell 4 per cent to its lowest level since mid-2010. Benchmark indices slid over 3 per cent in Mexico and Colombia.
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