PDG Realty Jumps Most in 4 Months on Brazil Inflation Bets

PDG Realty SA Empreendimentos & Participacoes climbed the most in four months in Sao Paulo, leading gains for Brazilian homebuilders, after an unexpected slowdown in inflation eased concern that higher borrowing costs will damp housing demand.

PDG gained 5.6 percent to 8.93 reais at the 4:15 p.m. New York time close, the steepest increase since Dec. 17. The BM&FBovespa Real Estate (IMOBBV) Index advanced 2.9 percent.

The measure had tumbled 14 percent this year through yesterday as central bank policy makers raised interest rates by 1.25 percentage points to 12 percent to rein in credit growth. Finance Minister Guido Mantega said today that inflation has peaked after a report showed the benchmark consumer price index in April exceeded the upper limit of the government’s target range for the first time since 2005.

“Anything that indicates that inflation is cooling, or that reduces the expectation for higher interest rates, benefits homebuilders,” said Armando Halfeld, an analyst at Rio de Janeiro-based Ativa Corretora.

MRV Engenharia & Participacoes SA, Brazil’s fourth-biggest homebuilder by revenue, gained 5.4 percent to 13.30 reais while Rossi Residencial SA (RSID3), the sixth-biggest, advanced 3.4 percent to 13.70 reais.

Consumer prices, as measured by the IPCA index, rose 6.51 percent in April from the same month a year earlier, the national statistics agency said today in a report distributed in Rio de Janeiro. Monthly inflation unexpectedly slowed to 0.77 percent, the agency said. Economists had expected prices to rise 0.84 percent, according to the median of 39 forecasts compiled by Bloomberg.

Traders drove down yields on interest-rate futures, with the yield on the contract due in January falling three basis points, or 0.03 percentage point, to 12.29 percent.

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 at papadopoulos@bloomberg.net

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