The Bovespa stock index gained for a
10th day, heading for its first monthly advance since March,
after Brazilian companies reported a jump in profit,
overshadowing a slowdown in U.S. economic growth.
Retailer Lojas Renner SA led gains after saying second-
quarter net income rose 90 percent. Vale SA, the world’s largest
iron-ore producer, advanced after reporting a fourfold increase
in profit. Tele Norte Leste Participacoes SA rose after saying a
surge in Internet and cell-phone subscribers boosted earnings.
The index erased an earlier loss as steelmakers Usinas
Siderurgicas de Minas Gerais SA and Gerdau SA tumbled after the
government lowered import duties on some steel products.
The Bovespa gained 0.7 percent to 67,406.84 at 11:43 a.m.
New York time after earlier declining as much as 1.1 percent.
Fifty-seven stocks rose on the measure while eight fell. The
real weakened 0.1 percent to 1.76 per dollar.
“U.S. GDP came a little bit below expectations, but a
reduction from the first quarter was already forecast,” said
Emerson Lambrecht, director of trading at Solidus Brokerage in
Porto Alegre, Brazil, which manages 1 billion reais ($568
million). “The prospects for growth this year indicate that
local companies’ earnings should continue to be good.”
Brazilian stocks are extending the longest rally since 2003
after the central bank signaled borrowing costs may rise at a
slower pace, boosting the outlook for retailers and banks that
depend on credit demand. The Bovespa has climbed 16 percent from
a May 20 low as investors seek riskier assets amid easing
concern about the strength of the global economic recovery. The
measure is poised for an 11 percent monthly gain, the first
since March and the largest since November.
Foreign Investment
“Foreign investors are putting more money in,” said
Lambrecht. “Very cautiously -- without excessive optimism -- I
would say the market is giving signs that it can continue its
upward trend.”
Growth in the U.S. slowed to a 2.4 percent annual rate in
the second quarter, lower than forecast, reflecting a larger
trade deficit and an easing in consumer spending.
The increase in gross domestic product compared with a
median forecast of 2.6 percent of economists surveyed by
Bloomberg News and follows a revised 3.7 percent pace in the
first quarter that showed a jump in inventories, according to
figures from the Commerce Department today in Washington.
Business investment climbed at the fastest rate since 1997.
Renner Advances
Lojas Renner, Brazil’s biggest publicly traded clothing
retailer, jumped 5.5 percent to 57.45 reais after saying that
profit rose to 91 million reais in the second quarter, according
to a regulatory filing.
Vale gained 1.2 percent to 43.01 reais after reporting
second-quarter net income increased to $3.7 billion after iron-
ore prices surged from a year earlier. The company said in its
earnings report that it sees continued “strong” demand for the
steelmaking ingredient this year.
Tele Norte Leste Participacoes SA, the parent of Brazil’s
biggest phone company, reported net income of 444 million reais
in the three months ended June 30, compared with a loss a year
earlier. Shares rose 1.9 percent to 26.33 reais.
Gerdau, Latin America’s largest steelmaker, declined for
the first time in three days, losing 0.4 percent to 25.79 reais.
Usiminas, as Brazil’s second-biggest steelmaker is known, fell
2.7 percent to 50.50 reais and earlier lost as much as 4.4
percent, the most in a month. Usiminas was cut to “neutral”
from “buy” at Banco BTG Pactual SA because of a
“challenging” local outlook of lower volumes and higher costs.
Import Duties
Brazil has lowered for six months import duties on some
steel products because of supply shortages, the Trade Ministry
said. Brazil reduced to 2 percent from 12 percent the import tax
it charges on two kinds of steel plates, the ministry said in a
statement on its website. Brazilian manufacturers don’t
currently produce the plates, even though they have the spare
capacity to do so, the ministry said.
The Bovespa index trades for 12.9 times analysts’ 2010
earnings estimates, compared with 12.1 times for the MSCI
Emerging Markets Index of 21 developing nations’ stocks and 16
times for Mexico’s IPC index, according to weekly data compiled
by Bloomberg. The Bovespa trades at 15.6 times the reported
profits of its companies after fetching 25.5 times in November,
the most in almost six years, weekly data show.
To contact the reporter on this story:
Alexander Cuadros in Sao Paulo at
acuadros@bloomberg.net
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