Bloomberg News

Bovespa Stock Index Advances as Stimulus Speculation Lifts OGX

January 14, 2013

The Bovespa (IBOV) index rose to a one-week high as Brazilian producers advanced amid a rally in commodities on speculation central bankers in the U.S. and Japan will take more steps to spur growth.

OGX Petroleo & Gas Participacoes SA, the oil company controlled by billionaire Eike Batista, contributed the most to the gauge’s advance. Banco do Brasil SA climbed as an executive said the bank is in talks that may lead to acquisitions in Florida and New Jersey.

The Bovespa rose 0.9 percent to 62,080.79 at close of trading in Sao Paulo, extending this month’s gain to 1.9 percent. Fifty stocks gained on the measure while 19 fell today.

Federal Reserve Bank of Chicago President Charles Evans said in Hong Kong that monetary policy has “an important contribution to make” as U.S. lawmakers reduce government spending to tame the deficit. Japanese Prime Minister Shinzo Abe said he wants a “bold policy leader” as the next governor of the Bank of Japan.

“We see more willingness to take on risk, which is good for equities,” Fernando Goes, an analyst at brokerage Clear Corretora in Sao Paulo, said in a phone interview. “The external outlook seems more favorable, so I think the optimism we’re seeing for the Bovespa in this start of the year can last for a while.”

The real gained 0.1 percent to 2.0313 per dollar. The Standard & Poor’s GSCI index of 24 raw materials climbed 0.9 percent for the highest closing level in almost three months. Commodities producers account for about 43 percent of the Bovespa’s weighting.

OGX, Vale

OGX added 3.7 percent to 5.36 reais. Vale SA, the heaviest- weighted stock on the benchmark index, climbed 0.6 percent to 39.77 reais.

Banco do Brasil rose 3.7 percent to 26.93 reais as Paulo Rogerio Caffarelli, the state-controlled lender’s vice president for international business, said in an interview last week in Sao Paulo that negotiations are under way with potential acquisition targets. He declined to name the companies involved.

Embraer SA, the world’s fourth-largest plane builder, gained 2.7 percent to 14.27 reais. The company said in a regulatory filing today that it delivered 106 commercial jets and 99 executive jets in 2012, which compares with deliveries of 105 commercial jets and 99 executive jets in 2011.

Homebuilder Tecnisa SA tumbled 3.9 percent to 7.72 reais after saying contracted sales dropped 43 percent in the fourth quarter from a year earlier. Results were “very disappointing,” Credit Suisse Group AG analysts including Guilherme Rocha wrote in a research note.

Economic View

Some companies that sell locally dropped after a central bank survey showed analysts covering Brazil lowered their forecasts for this year’s economic growth for a second week.

Retailer Cia. Hering lost 2.3 percent to 38.25 reais. The MSCI Brazil/Consumer Discretionary Index dropped 0.2 percent, the only decline among 10 industry groups.

Gross domestic product will expand 3.2 percent this year, according to the median forecast in a Jan. 11 central bank survey of about 100 economists published today. They had forecast expansion of 3.26 percent a week earlier

The Bovespa entered a bull market on Jan. 3 after rising 21 percent from last year’s low on June 5 as stimulus from central banks around the world eased concern that economic growth might miss expectations while borrowing costs at a record low in Brazil boosted equity demand. The index has since pared its gain to 18 percent.

Brazil’s benchmark equity index trades at 11.2 times analysts’ earnings estimates for the next four quarters, compared with 11 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 7.3 billion reais in stocks in Sao Paulo, according to data compiled by Bloomberg. That compares with a daily average of 7.25 billion reais in 2012, 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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