After weeks of mass protests, Brazilian President Rousseff calls for a referendum and Constituent Assembly to carry out political reform in the country. Off more than 20% this year, the Bovespa is the worst performer among major emerging markets. The carnage in Brazilian ADRs includes BBD, CZZ, FBR, GFA, ITUB, OIBR, PBR, VALE. Brazilian ETFs EWZ and BRF have fared little better.
Lennar (LEN -3.37%) suffered today after a J.P. Morgan downgrade. Morgan analysts lowered the stock to neutral from overweight and lowered the price target from $48 to $46.50, projecting "some modest near term downside risk." Collateral damage to housing stocks included Gafisa (GFA -6.21%),Toll Bros. (TOL -2.95%), Hovnanian (HOV -2.77%), PulteGroup (PHM -1.99%), KB Home (KBH -1.78%).
Gafisa SA (GFA +4.3%) gains today on a likely spate of short-covering, rising for the first time since March 11, the day before the Brazilian homebuilder reported a Q4 net loss that lagged analyst forecasts. The shares are off nearly 14% since the earnings announcement.
Brazilian real-estate developer Gafisa (GFA +13.6%) ramps higher after swinging a profit in Q2 and putting an end to the streak of losses in the previous quarters, as it reduced expenses by cutting the volume of new project launches and slashing costs. Since last year the company has been restructuring its subsidiaries, mainly Tenda, which it acquired at the end of 2008. However, the acquisition hasn't paid off and has been a considerable drain on operating costs.