Bloomberg News

Bovespa Index Gains Fourth Day as Sabesp Leads Utilities Rally

January 04, 2012

Jan. 4 (Bloomberg) -- The Bovespa stock index advanced for a fourth day, the longest rising streak in almost three months, as a rally by utilities outweighed a report that showed inflation unexpectedly quickened in Brazil’s biggest city.

Cia. de Saneamento Basico do Estado de Sao Paulo, Brazil’s biggest water utility, rose to a record high as the MSCI Brazil/Utilities Index jumped the most among 10 industry groups. Centrais Eletricas Brasileiras SA, Latin America’s largest publicly traded utility, gained after Brazil’s energy research agency said electricity consumption will rise 4.5 percent a year on average through 2021.

The Bovespa climbed 0.2 percent to 59,364.95 at the close of trading in Sao Paulo. Thirty-five stocks advanced on the index, while 34 dropped. The real weakened 0.1 percent to 1.8326 per U.S. dollar.

“There’s too much uncertainty in the market right now, and in such a scenario investors look for stocks that are less risky,” Renato Bandeira de Mello, head of equity trading at Futura Corretora, said by phone from Sao Paulo. “Utilities have a more stable cash flow, and are also a hedge against inflation, since their tariffs are pegged to price indexes.”

Brazil’s benchmark equity gauge earlier sank as much as 1.2 percent after a report showed consumer prices in Sao Paulo rose 0.61 percent last month, compared with 0.60 percent in November, according to the Foundation Economics Research Institute’s FIPE report. The median estimate of 17 economists surveyed by Bloomberg was for inflation to slow to 0.47 percent.

Sabesp, Eletrobras

Sabesp, as Cia. de Saneamento de Sao Paulo is known, surged 4.6 percent to 54.60 reais, the best performer on the Bovespa. Eletrobras, as Centrais Eletricas is known, added 4.3 percent to 27.49 reais.

Localiza Rent a Car SA, Latin America’s biggest car-rental company, tumbled 3.8 percent to 26.65 reais, the steepest one- day drop in three weeks, after Credit Suisse cut the stock to “neutral” on concern used-car sales will slow in 2012.

The Bovespa has gained 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. The gauge trades at 10 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 5.51 billion reais ($3.01 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average in 2011 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

To contact the editor responsible for this story: David Papadopoulos in New York at

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