Bloomberg News

Bovespa Index Advances to Nine-Month High on Corporate Earnings

February 17, 2012

Feb. 16 (Bloomberg) -- Brazil’s Bovespa index rose to a nine-month high after companies including Ultrapar Participacoes SA reported quarterly earnings that surpassed forecasts.

Petrochemicals group Ultrapar, cosmetics maker Natura Cosmeticos SA and phone company Telefonica Brasil SA all rose after releasing their fourth-quarter earnings. Homebuilder MRV Engenharia & Participacoes SA led gains by companies that depend on credit growth as traders stepped up bets for lower borrowing costs in Brazil after reports showed inflation slowed more than forecast.

Brazil’s benchmark equity measure rose 1.2 percent to 66,141.70 at the close of trading in Sao Paulo, the highest level since April 27. Fifty-one stocks rose on the index, while 15 fell. The real gained 0.7 percent to 1.7164 per U.S. dollar.

“The Brazilian economy is in good shape, growing with inflation apparently under control, allowing companies to report good earnings,” Fabio Cardoso, a partner at Rio de Janeiro- based equity advisory firm Adinvest Consultoria, said in a phone interview.

Telefonica jumped 3.4 percent to 50.27 reais. Brazil’s unit of Spain’s largest phone company reported fourth-quarter net income of 1.46 billion reais ($851 million), beating the average estimate of 1.19 billion reais in a Bloomberg survey of 10 analysts.

Ultrapar, Natura Gain

Ultrapar added 2.6 percent to 36.75 reais, the highest price since the company’s initial public offering in 1999, after reporting fourth-quarter net income of 221 million reais, according to a regulatory filing yesterday evening. That exceeded an estimate for profit excluding some items of 192.7 million reais, the average forecast among six analysts surveyed by Bloomberg.

Natura advanced 1 percent to 41.40 reais after earlier rising as much as 3.1 percent. The company reported fourth- quarter net income of 290.7 million reais, beating the 255.3 million reais average estimate of 12 analysts surveyed by Bloomberg.

MRV gained 3.4 percent to 15.32 reais. Consumer prices as measured by Brazil’s IPC-S index rose less than economists forecast in the month through yesterday. Consumer prices in Sao Paulo as measured by the IPC-Fipe rose 0.24 percent in the four weeks through Feb. 14, also below estimates.

Petroleo Brasileiro SA, Brazil’s state-controlled oil company, rose 3.4 percent to 23.88 reais. Crude climbed to a six-week high on optimism Greece will get a second bailout and as U.S. jobless claims dropped to the lowest level since 2008.

Interest-Rate Futures

The yield on the Brazilian interest-rate futures contract due in January 2013 dropped five basis points, or 0.05 percentage point, to 9.22 percent.

Brazil’s benchmark equity measure has advanced 17 percent this year, after slumping 18 percent in 2011, buoyed by Brazil’s interest-rate cuts, signs of growth in the U.S. and renewed optimism Europe may be closer to solving its debt crisis. The gauge trades at 10.5 times analysts’ earnings estimates, which compares with a ratio of 10.6 for MSCI Inc.’s measure of 21 developing nations’ equities, weekly data compiled by Bloomberg show.

Traders moved 8.33 billion reais in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares with a daily average of 6.59 billion reais this year through Feb. 7, according to data from the exchange.

--Editors: Glenn J. Kalinoski, Richard Richtmyer

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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