Bloomberg News

Vale at Cheapest in 3 Years Soars in N.Y. on Stimulus Bets

September 07, 2012

Vale SA (VALE5), the world’s largest iron- ore producer, jumped the most since January in New York as investors speculated Chinese government spending and European Central Bank bond purchases will benefit commodities producers.

Global commodities and equities extend a rally after China approved plans to build 2,018 kilometers (1,254 miles) of roads, signaling the world’s second-largest economy is stepping up stimulus efforts to revive growth a day after the European Central Bank agreed to an unlimited bond-buying program.

“This is exactly what investors have been waiting for to start buying,” Laurence Balter, who oversees $100 million for Fox Island, Washington-based Oracle Investment Research, including Vale shares, said in e-mailed comments. “The most obvious choice is commodity producers such as Vale; they are cheap and have bottomed out.”

Vale’s American depositary receipts jumped (VALE:US) 6.8 percent to close at $18.03 in New York, the biggest advance since Jan. 3. The ADRs have risen 10 percent since Aug. 31, the biggest weekly gain since October and reducing a year-to-date slump to 16 percent.

Vale’s shares in Sao Paulo, which aren’t trading today because of an Independence Day public holiday, fetch 6.2 times reported earnings compared with the Brazilian benchmark’s ratio of 18.8, according to data compiled by Bloomberg. That’s the biggest gap since December 2009, the data show.

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at

To contact the editor responsible for this story: James Attwood at

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