UBS Says Sell Brazil's Best Stock as Short Squeeze Is Over

(Bloomberg) -- UBS Group is urging investors to sell Brazil’s best-performing stock and says “the short squeeze is over.”

The Swiss bank reiterated its sell rating on steelmaker Cia Siderurgica Nacional SA, saying iron ore prices will weaken mid-year and there’s a risk that Brazil’s government lowers import tariff support in the coming years. The stock’s short interest ratio also declined to the lowest level in four years in mid-March, analysts led by Andreas Bokkenheuser said in a note Wednesday.

Cia Siderurgica Nacional has gained 78 percent since the beginning of the year, almost double the performance of the second-best stock on Brazil’s benchmark Ibovespa index. The company has nine buy ratings, three holds and three sells among analysts tracked by Bloomberg. UBS said the company’s forecast for adjusted Ebitda growth this year and the bank’s expectations for accelerated deleveraging are already priced into the shares.

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