Brazil Utilities Surge on Lobao Appointment Prospects

Brazilian utilities stocks rallied, with the benchmark gauge in the biggest advance since May, on speculation President-elect Dilma Rousseff will maintain government policies on the industry.

Rousseff’s biggest coalition partner wants former Energy Minister Edison Lobao to return to his post, a party member familiar with the plans said earlier this week. Investors expect Rousseff to name Lobao to the ministry, signaling policy continuity that will ensure government investment, said Rosangela Ribeiro, an analyst at SLW Corretora.

“The fact that Lobao is coming back may be read positively by the market,” Ribeiro said in a phone interview from Sao Paulo. “It signals the strategy of strengthening the sector will be maintained.”

Lobao, 73, a senator in the Brazilian Democratic Movement Party, or PMDB, stepped down as energy minister in March. Rousseff, who takes office Jan. 1, served in the post under President Luiz Inacio Lula da Silva.

MSCI’s index of Brazilian utilities stocks jumped 3.4 percent, the biggest advance since May 10, as all 12 members rose. The gauge has advanced for four straight sessions.

Cia. Energetica de Minas Gerais, the state-controlled electricity utility known as Cemig, surging 3.1 percent to 29.60 reais in Sao Paulo trading. Centrais Eletricas Brasileiras SA, or Eletrobras, Latin America’s largest utility, climbed 3.5 percent to 28 reais.

To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos in New York at papadopoulous@bloomberg.net

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