Bovespa Volume May Tumble to 2006 Level, Pinto Says (Update3)

By Leonardo Lara and Francisco Marcelino
Feb. 18 (Bloomberg) -- Brazil’s stock-exchange volume may tumble to 2006 levels this year amid the global financial crisis, said BM&FBovespa SA Chief Executive Officer Edemir Pinto.
Trading volume will decline after rising to 1.4 trillion reais ($582 billion) in 2008 and 1.2 trillion reais in 2007 on surging share sales, Pinto said in a Bloomberg Television interview in Sao Paulo. Volume was 598.9 billion reais in 2006.
“The total amount traded could return to 2006 levels,” Pinto said in a separate interview later in the day.
BM&FBovespa, Latin America’s biggest exchange, slumped 4.5 percent to 6.22 reais in Sao Paulo trading. The decline extended a drop this week to 11 percent.
Brazil stock trading surged in 2007 as companies raised a record 75.5 billion reais selling shares in initial and secondary offerings, according to the country’s securities regulator. Average daily stock trading volume rose to a record 7 billion reais in May 2008 before sliding to 3.8 billion reais in December after a plunge in equities prices.
“The years of 2007 and 2008 were atypical because of share offerings,” Pinto said.
A Bovespa spokesman said tonight that the bourse gave no projection for stock market volumes in 2009.
‘Zero Return Abroad’
Victor Kaneo Mizusaki, an analyst at Itau Corretora de Valores SA in Sao Paulo, said a fall in average daily volume to 2006 levels would be about 50 percent bigger than he estimated. Mizusaki expects daily volume will average 4.4 billion reais in 2009, he said in an interview.
Average daily volume in the fourth quarter of 2006 was 3 billion reais, compared with 4.45 billion reais in the same period last year. Average volume reached 6.96 billion reais a day in the fourth quarter of 2007, according to Bloomberg data.
A return of foreign investors may boost volume toward year end, Pinto said.
“Foreign investors are coming back to Brazil as they face almost zero return abroad and because of Brazilian economic fundamentals,” said Pinto. “Foreign inflows may fully recover in the second half of the year.”
Foreign investors pulled a record 24.6 billion reais from Brazilian stocks last year, according to BM&FBovespa. The Bovespa index tumbled 41 percent in 2008, the most ever.