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Bovespa Stock Index Gains on Petrobras Share Sale Plan, U.S. Jobs Report
Brazil’s Bovespa stock index posted the biggest weekly gain since July after Petroleo Brasileiro SA rallied on speculation a planned equity offering will bolster its oil exploration program.
Petrobras, Brazil’s state oil company, jumped the most in three months as the sale helped overshadow concern that the offering would dilute earnings. LLX Logistica SA surged as a record jump in second quarter investment boosted the outlook for logistics companies.
“You can’t just think about the dilution, you have to think about the investment possibilities Petrobras will have going forward,” said Fabio Cardoso, a partner at Adinvest Consultoria, a Rio de Janeiro-based equity consulting firm.
The Bovespa advanced 1.7 percent this week, the most since the week ended July 30. The measure fell 0.2 percent to 66,678.62 at 4 p.m. New York time. Forty-seven stocks dropped while 20 gained. The real weakened 0.5 percent to 1.7340 per dollar.
The index was dragged down late in the day by OGX Petroleo & Gas Participacoes SA, which slumped after the Ontario Teachers’ Pension Plan Board cut its stake amid speculation investors will sell shares of Brazil’s largest companies to buy the Petrobras offering.
OGX Falls
“Investors may be selling OGX to get into the Petrobras operation,” said Joao Pedro Brugger, who helps oversee 70 million reais ($40 million) at Leme Investimentos in Florianopolis, Brazil. “The most liquid companies are going to suffer a bit with the Petrobras capitalization as investors get into cash.”
Brookfield Incorporacoes SA helped lead real-estate declines as faster-than-expected economic growth spurred traders to bet on higher interest rates.
Petrobras gained 4.4 percent to 28.80 reais after saying it plans to sell as much as 55 billion reais ($32 billion) of new stock to minority shareholders. The company will offer as many as 1.59 billion new preferred shares and 2.17 billion new voting shares, according to a regulatory filing today. The company may offer an additional 564 million preferred or voting shares depending on demand, with the price to be announced Sept. 23.
Petrobras is seeking to fund the development of offshore fields such as Tupi, the largest discovery in the Americas in three decades, and to save its investment grade credit rating. The share sale would be the world’s largest. Petrobras also plans to sell $42.5 billion of stock to the government for oil reserves.
Economic Growth
The stock fell 25 percent this year through yesterday on concern earnings will be diluted by the stock offering.
LLX gained 5.2 percent, the most since July 27, to 9.56 reais.
Brazil’s economic growth slowed less than expected in the second quarter on a record jump in investment. Gross domestic product grew 1.2 percent in the three months through June from the previous quarter, compared with a 2.7 percent expansion in the first quarter, the national statistics agency said today in Rio de Janeiro. Economists surveyed by Bloomberg expected 0.7 percent growth, according to the median of 41 forecasts.
Investment expanded 2.4 percent from the previous quarter and 26.5 percent from a year ago, the biggest jump since the series began in 1996.
Futures Contracts
Yields on interest-rate futures contracts due in January 2012 jumped six basis points, or 0.06 percentage point, to 11.37 percent.
Brookfield fell 3.2 percent to 8.89 reais.
OGX, controlled by Brazilian billionaire Eike Batista, declined 5.7 percent to 19.30 reais after the Ontario pension plan reduced its stake to 4.77 percent on Sept. 1, after previously holding as much as 10.67 percent, according to data compiled by Bloomberg.
The Bovespa index trades for 12.5 times analysts’ 2010 earnings estimates, compared with 11.9 times for the MSCI Emerging Markets Index of 21 developing nations’ stocks and 15.5 times for Mexico’s IPC index, according to weekly data compiled by Bloomberg. The Bovespa trades at 14.4 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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