Oct. 28 (Bloomberg) -- The Bovespa stock index posted its biggest weekly advance in more than two years as BRF Brasil Foods SA and Cia. Hering reached record highs after third- quarter profits topped analysts’ estimates and consumer stocks rallied on speculation borrowing costs will decline in Brazil.
Gains on the gauge were limited as Lojas Renner SA, Brazil’s biggest publicly traded clothing retailer, plunged after third-quarter profit fell as sales growth slowed.
The Bovespa gained 0.4 percent to 59,513.12 at the close of trading, extending this week’s gain to 7.7 percent, the most since the period ended May 8, 2009. Thirty-four stocks advanced on the index, while 31 tumbled. The real strengthened 2.2 percent to 1.6721 per U.S. dollar.
“Companies have reported good earnings, especially those which are linked to domestic demand,” Fausto Gouveia, who helps manage about 250 million reais ($150 million) at Legan Administracao de Recursos, said by phone from Sao Paulo. “For now, those stocks will probably do better than the ones linked to commodities, as the outlook for Brazil’s domestic demand looks pretty good while the global economy is still a source of much uncertainty.”
Brasil Foods, the world’s largest poultry exporter, rose 1.5 percent to 35.54 reais. The company reported third-quarter net income of 365 million reais, a 73 percent increase from a year earlier, according to a statement yesterday. It was expected to report a profit of 314 million reais excluding some items, according to the average of eight analysts estimates compiled by Bloomberg.
Hering, Brazil’s second-largest clothing retailer, rose 3.6 percent to 38.21 reais. Its third-quarter profit was 63.7 million reais, up 63 percent from 39.1 million reais a year earlier, according to a regulatory filing. The company was expected to post net income excluding some items of 56.9 million reais, according to the average estimate in a Bloomberg survey of four analysts.
In the interest-rate futures market, yields on most contracts dropped. Yields on the contract due January 2013, the most-actively traded today in Sao Paulo, slid five basis points, or 0.05 percentage point, to 10.34 percent.
Hypermarcas SA, Brazil’s fifth-largest consumer-goods company by market value, advanced 2 percent to 9.91 reais, as the MSCI Brazil/Consumer Staples Index rose the most in two months.
Renner plunged 7.5 percent to 52.80 reais, the worst performer on the Bovespa, after third-quarter profit fell to 56.7 million reais from 57 million reais a year earlier, according to a statement yesterday. The results missed the average estimate of 64.5 million reais in a Bloomberg survey of seven analysts. Bank of America Corp. cut the stock to “neutral” from “buy.”
International Meal Co. Holdings SA rose 4.6 percent to 11.30 reais after the restaurant operator said its board approved the repurchase of as many as 3.38 million common shares during the next year.
The Bovespa entered a bull market yesterday after gaining 22 percent from the bear-market low on Aug. 8. The measure trades at 9.7 times analysts’ earnings estimates, compared to a ratio of 10 for MSCI Inc.’s gauge of 21 developing nations’ equities, weekly data compiled by Bloomberg show.
Traders moved 6.33 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares to a daily average this year of 6.56 billion reais through Oct. 26, according to data from the exchange.
--Editors: Marie-France Han, Richard Richtmyer
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