Bloomberg News

HSBC’s Bastos Predicts Bovespa to Surpass 75,000

March 02, 2012

(Corrects official’s position at HSBC in first paragraph of story originally published March 1.)

Brazilian stocks, off to the best annual start since 1999, will extend their rally as overseas demand for the country’s commodities and interest-rate cuts push investors into equities, said Pedro Bastos, head of HSBC Global Asset Management in Latin America.

The Bovespa will advance another 14 percent this year after rising 17 percent in the first two months, Bastos said. The index will reach 75,000 by year-end, surpassing the record of 73,516 set in 2008, from 65,811.73 yesterday, he said.

“The market still hasn’t recovered to where we were in 2010, so when you look at Brazil, it still seems a very attractive market,” Bastos said in a phone interview from Sao Paulo. “The government is trying to make local interest rates converge with the Latin American average. So there is still a lot of room to still cut rates and that will boost the migration of local investors to the equity market.”

The Bovespa sank 18 percent in 2011 as the global economic slowdown weakened demand for commodities. The UBS Bloomberg CMCI Index (CMCIPI) of 27 raw materials has advanced 8.2 percent this year after falling 6.1 percent in 2011.

Brazil’s central bank has cut the benchmark interest rate four times since August, trimming it 200 basis points to 10.5 percent. It remains the highest among major Latin American countries that set target interest rates.

The Bovespa’s gain this year is surpassed in the region only by Colombia’s IGBC and Peru’s IGBVL, which have advanced 18 percent and 17 percent, respectively.

To contact the reporters on this story: Eduardo Thomson in Santiago at ethomson1@bloomberg.net; Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

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


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