Bloomberg News

Bovespa Rises for Third Day as Oil Gain Lifts Petrobras and OGX

December 20, 2012

The Bovespa (IBOV) index rose for a third day as Petroleo Brasileiro SA (PETR4) and OGX Petroleo e Gas Participacoes SA (OGXP3) followed crude higher after U.S. House Speaker John Boehner said he expects to keep working on a budget plan with President Barack Obama.

Banco do Brasil SA jumped after a regulatory filing on Brazil’s regulator website showed that its unit, Banco Votorantim, filed to sell shares in a primary and secondary offer. The file was retracted minutes later by the regulator.

The Bovespa index gained 0.5 percent to 61,276.12 at the close of trading in Sao Paulo. The measure is up 8 percent this year. Boehner’s remarks helped equities rebound after the Bovespa fell as much as 0.6 percent earlier on signs budget talks in the U.S. were deteriorating.

“After Boehner spoke, the market had an exceptional turnaround,” Ari Santos, a manager at Sao Paulo-based brokerage H.Commcor, said by phone. “It shows the market is expecting something to be done quickly, even before year-end.”

Thirty-eight stocks rose today while 29 fell. The real gained 0.1 percent to 2.0693 per dollar.

Petrobras rose 0.6 percent to 21.05 reais as crude oil for February delivery rose 15 cents to $90.13 a barrel on the New York Mercantile Exchange, the highest settlement since Oct. 18. OGX advanced 0.5 percent to 4.28 reais.

Banco do Brasil rose 3.3 percent to 25 reais.

Inflation Outlook

Some stocks linked to domestic demand advanced after the central bank cut its 2013 inflation forecast and signaled interest rates will remain at a record low for a long time.

Homebuilder PDG Realty SA rose 4.3 percent to 3.41 reais and contributed the most to the gauge’s advance. The central bank lowered its forecast for inflation next year to 4.8 percent, down from 4.9 percent three months earlier, in a quarterly inflation report today. Gross domestic product will expand 1 percent this year and 3.3 percent in the year through the end of the third quarter of next year, the bank said.

“The central bank is showing that it doesn’t foresee increases in the benchmark lending rate, as it seems comfortable with the outlook for inflation,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro.

LLX Logistica SA, the port developer controlled by billionaire Eike Batista, surged 5.4 percent to 2.33 reais after saying it signed a 20-year contract to lease space at its Acu port to the Brazilian unit of Vallourec SA, a French maker of steel pipes for the oil and gas industry.

Trading Volume

The Bovespa index has climbed 17 percent from this year’s low in June as stimulus from central banks around the world eased concern about an economic slowdown, while record-low benchmark lending rates have pushed some investors to move into stocks from fixed income.

The index trades at 11.5 times analysts’ earnings estimates for the next four quarters, which compares with a ratio of 11.1 for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 6.55 billion reais in stocks in Sao Paulo, data compiled by Bloomberg show. That compares with a daily average of 7.28 billion reais this year through Dec. 18, according to data compiled by the exchange.

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 at papadopoulos@bloomberg.net


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