According to data from Bloomberg, traders are increasing bets that PDG, Brazil’s worst- performing homebuilder in 2012, will plunge further after short positions returned more than 60 percent in the past year.

The ratio of borrowed shares in Brazil’s third-biggest homebuilder exceeds 16 percent, the third highest among companies on the benchmark Bovespa index and up from 9.5 percent at the start of the year.

MRV has the highest short positions among developers and the second-highest on the Bovespa at 20 percent of total float. The ratio of borrowed shares also exceeds 10 percent for builders Rossi, Cyrela and Gafisa.

New home sales in Sao Paulo, Brazil’s biggest city, peaked in 2010 and plunged 21 percent the following year, when new houses and apartments outpaced demand by a third.

Standard & Poor’s said in a Dec. 21 statement that it has a negative outlook for PDG’s BB- credit rating, three grades below investment quality.

“Investors are worried about demand for homes. And demand for homes is sort of cooling”, said an analyst.

Source: Bloomberg

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One Response to Five of the 10 most-shorted stocks in Brazil are homebuilders; demand for homes is cooling

  1. Ranghora says:

    For sure Brazil’s realestate bubble is one of the biggest in the world and in process of bursting in the near future. In addition to the large inventory construction companies carry in their books, there is an amazing high number of people trying to get rid of their properties, which they bought during contruction, seen that after taking delivery of the property they face large finance payments on top of the always out of control maintenance levies (condominio). People just do not have the money to pay for all those RE expenses on top of private schooling, private health insurance, and all that goes with being middle class in Brazil. Expect bubble to burst by 1st half of 2014 at the latest.

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