State-controlled oil producer Petroleo Brasileiro SA sank to the lowest level since 1999 as the Ibovespa fell for a third consecutive day, joining a global market selloff.
Petrobras, as Petroleo Brasileiro is known, dropped as oil declined to the lowest in 13 years. Miner Vale SA followed iron ore lower, leading losses among raw-materials companies. Itau Unibanco Holding SA contributed the most to the benchmark equity index’s decline amid concern that forecasts for Brazil’s deepest recession in more than a century will sap corporate profits.
Energy companies and financial institutions were among the worst performers in the world Thursday as the decline in crude prices fueled speculation that producers may not be able to meet their financial obligations, causing losses to banks. Investors fled riskier assets for alternatives perceived as safer, such as gold, which rallied the most since December 2014.
“It’s a very nervous day for the markets all over the world today, and Brazil stocks are suffering with this risk aversion,” said Pablo Spyer, the operational director at brokerage Mirae Asset Wealth Management in Sao Paulo. His firm oversees 5 billion reais ($1.3 billion) of assets.
The Ibovespa fell 2.4 percent to 39,393.60 at 11:05 a.m. in Sao Paulo as 59 of its 61 stocks dropped. Petrobras lost 2.8 percent to 4.19 reais, Vale declined 3.4 percent to 7.47 reais and Itau lost 2.7 percent to 24.25 reais.
The price-to-book ratio for Brazil’s local stock benchmark fell to 0.93, a level that indicates investors think the nation’s biggest companies are worth less than their net assets. The valuation in Brazil is about half that of the MSCI All- Country World Index, which is on the brink of a bear market.