Ibovespa Falls Third Day as JBS Tumbles After Vetoed Expansion

(Bloomberg) -- The Ibovespa fell for the third straight day as meatpacker JBS SA plunged after scrapping a corporate restructuring plan.

JBS tumbled after the national development bank, known as BNDES, vetoed the company’s plan to shift its corporate registration from Brazil to Europe. Natura Cosmeticos SA slumped on concern the second replacement of its chief executive officer in a little more than two years may harm the implementation of a new sales strategy.

The cancellation of JBS’s internationalization strategy was another blow for the meatpacker, who has dropped 15 percent this year amid a graft probe that involved groups controlled by its parent company and its main shareholders, members of the Batista family. A new head was named to BNDES after Michel Temer replaced impeached President Dilma Rousseff in August, and the bank, which had supported the expansion of companies that the previous government encouraged to become multinational giants, has signaled credit conditions will also get tougher.

"It will be a big change for JBS as the company will not be able to rely on BNDES’s generous subsidies anymore," Adeodato Volpi Netto, head of capital markets at Eleven Financial Research, said from Sao Paulo. "The company has overcome many problems in recent months, but this setback shows it’s not too big to fail."

The Ibovespa lost 0.1 percent to 63,825.69 at the close of trading in Sao Paulo as 30 of its 58 stocks fell. JBS slumped 11 percent, contributing most to the gauge’s decline. Natura retreated 4.3 percent. Frequent-flier services provider Multiplus SA dropped 6.4 percent, the most since February, after Banco Santander Brasil SA recommended selling the stock as the company faces tougher competition.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Sebastian Boyd, Jessica Brice