Bloomberg News

Bovespa-Index Futures Decline as Central Bank Holds Rate Steady

January 17, 2013

Bovespa-index futures dropped after the central bank signaled it will keep borrowing costs at a record low.

Multiplus SA, the frequent-flyer unit of Latam Airlines Group SA’s Brazil subsidiary, may move after calling a shareholder meeting to choose a chairman to replace Maurício Rolim Amaro. Beef producer Marfrig Alimentos SA may be active after selling $600 million of bonds maturing in July 2017.

Bovespa (IBOV) futures slid 0.1 percent to 61,810 at 9:20 a.m. in Sao Paulo. The real declined 0.1 percent to 2.0409 per dollar.

The central bank board, led by Alexandre Tombini, kept the benchmark interest rate at 7.25 percent for a second straight meeting yesterday, matching the forecast of all 56 analysts surveyed by Bloomberg. The best strategy is to keep monetary policy conditions unchanged for a “prolonged period,” policy makers said in a statement accompanying the unanimous decision.

The central bank ended the steepest rate-cutting cycle among the Group of 20 nations in November after adverse climate in the U.S. and Brazil led to a jump in food prices.

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 gauge trades at 11.5 times analysts’ earnings estimates for the next four quarters, compared with 10.9 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 5.77 billion reais ($2.8 billion) in stocks in Sao Paulo yesterday, which 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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