FiNETIK – Asia and Latin America – Market News Network

Foreign investors pulled money from Brazil’s stock market for a seventh month in December, the longest streak since at least 1995, as costlier credit and a slowing economy led investors to sell the country’s assets.

Foreign investors sold 439 million reais ($195 million) more than they bought in stocks last month, BM&FBovespa SA said in a statement posted on its Web site. That brought the total outflow for 2008 to 24.6 billion reais, compared with 4.2 billion reais in 2007.

“Last year was a year for huge outflows due to massive de- leveraging of investments, and 2009 will be a year of rebuilding portfolios,” said Regis Abreu, who helps manage the equivalent of $624 million at Mercatto Gestao de Recursos in Rio de Janeiro.

The sell-off, which started with two record months of more than 7.4 billion reais of outflows in June and July, slowed in the last two months of the year. Investors sold 1.2 billion reais more stocks than they bought in November, after withdrawing 4.7 billion reais in October. In December, investors sold 27.9 billion reais and bought 27.5 billion reais of shares.

The benchmark Bovespa index plunged 49 percent from a May record and ended 2008 down 41 percent, its worst year ever, as commodity prices tumbled and credit markets seized up amid a deepening financial crisis that cut demand for riskier assets. The index has gained 11 percent in the first two trading days of 2009 to close at 41,518.66 today.

The country’s main stock index will rebound this year, according to strategists. Banco Santander SA, Spain’s biggest bank, expects the Bovespa to rise to 49,000 points in 2009. Citigroup Inc. strategist Geoffrey Dennis expects the Bovespa to rally to 55,000 points, while Itau Corretora forecasts 66,500 for the 66-member index. Deutsche Bank AG predicts the Bovespa may end the year at 45,000.

Source: Bloomberg, 05.01.2009, by Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net