UBS Cuts Brazil Paper

UBS has cut the equity ratings of pulp and paper companies Aracruz and Votorantim Celulose e Papel to sell from neutral, as production cuts are expected to increase costs and BRL depreciation should generate additional FX losses in the fourth quarter of 2008. The shop is bearish on the industry as a whole. “We recommend investors to avoid the sector in 2009 given the poor demand outlook for pulp, excess capacity and expensive valuations,” it says.