Bloomberg News

Bovespa Stock Index Rises as Brazil Prices Decline in December

January 02, 2012

Dec. 29 (Bloomberg) -- The Bovespa stock index advanced, paring its first annual decline since 2008, after Brazil’s broadest price index dropped in December. The country’s benchmark equity gauge fell 18 percent in 2011.

Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil’s biggest retailer, jumped the most in four weeks, leading gains by companies that depend on domestic demand. Lupatech SA, Brazil’s biggest provider of oil equipment and services, advanced for the first time in four days after saying it will sell as much as 700 million reais ($375 million) of new stock.

The Bovespa gained 0.4 percent to 56,754.08 at the close of trading in Sao Paulo. Forty-four stocks rose on the index, while 24 fell. The real strengthened 0.4 percent to 1.8669 per U.S. dollar. Today was the last trading day of 2011 in Brazil. The Bovespa’s decline is the first since 2008, when it plunged 41 percent as the collapse of Lehman Brothers Holdings Inc. roiled global markets.

“The outlook for the Brazilian economy is positive, and inflation should not be a big problem, especially considering that the global slowdown should help keep prices under control,” Felipe Casotti, who helps manage 1.2 billion reais at Maxima Asset Management, said by phone from Rio de Janeiro.

Brazil’s IGP-M index of wholesale, construction and consumer prices dropped 0.12 percent in December from November, the Getulio Vargas Foundation said on its website today. The lowest estimate among 22 analysts surveyed by Bloomberg was for a 0.13 percent decline.

Pao de Acucar, Lupatech Gain

Pao de Acucar gained 3.5 percent to 67 reais.

Lupatech rose 3.5 percent to 4.45 reais. Brazilian development bank BNDES, pension fund Petros and GP Investment Ltd. will buy all the new shares the company is selling, Lupatech said in a regulatory filing today.

Banco Panamericano SA, the Brazilian lender that was purchased by Banco BTG Pactual SA after a bailout last year, slumped 7.4 percent to 6.05 reais, the most since Feb. 3, on concern a planned share sale will dilute the value of its existing stock.

The Bovespa entered a bull market in October after gaining 22 percent from a two-year low on Aug. 8 as interest-rate cuts in Brazil and signs of progress in solving Europe’s debt crisis buoyed demand for equities. It trades at 10.2 times analysts’ earnings estimates, in line with the ratio for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 4.84 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average this year of 6.51 billion reais through Dec. 27, according to data from the exchange.

--Editors: Richard Richtmyer, Marie-France Han

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net


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