Most Bovespa Stocks Drop as Interest-Rate Outlook Offsets Steelmaker Rally
The Bovespa stock index gained for a third day as steelmakers rallied and Brazilian banks advanced, following the rise of financial stocks around the world on eased concern about the Greek debt crisis.
Usinas Siderurgicas de Minas Gerais SA jumped the most in almost four months after Deutsche Bank AG said in an e-mailed note to clients that steel prices are “nearing a ‘floor’.” Banco do Brasil SA, Latin America’s biggest bank by assets, led gains by banks.
Brazil’s benchmark equity gauge climbed 0.1 percent to 62,333.97 at the close of Sao Paulo trading at 4:15 p.m. New York time. Thirty-five stocks declined on the index, while 31 rose. The real strengthened 0.5 percent to 1.5675 per U.S. dollar.
“Steelmakers’ stocks are starting to become quite cheap”, Leonardo Brito, an equity analyst at Teorica Investimentos in Rio de Janeiro, said in a telephone interview today. “If you look at future cash flow, these shares are worth much more,” he said.
Usiminas, as Usinas Siderurgicas is known, jumped 4.8 percent to 13.81 reais, the most since March 3. Cia. Siderurgica Nacional SA, which had slumped 29 percent this year through yesterday, rose 2 percent to 19.25 reais. Steel prices are nearing a “floor” and should be “flat-to-up” in the short term, Deutsche Bank’s analyst David Martin wrote in a note to clients.
Separately, U.S. steel demand could “surprise to the upside” in the third quarter, said Goldman Sachs Group Inc. analyst Sal Tharani. Gerdau SA, which generated 28 percent of 2010 net sales from North America, advanced 3.1 percent to 16.18 reais.
Brazilian banks advanced after Greek Prime Minister George Papandreou clinched enough votes today to pass the first part of an austerity plan aimed at meeting European Union aid requirements and staving off default for his debt-laden nation.
Banco do Brasil rose 1.4 percent to 27.81 reais.
Cia. Brasileira de Distribuicao Grupo Pao de Acucar slid 3.1 percent to 71 reais, erasing an earlier gain of 12 percent, as speculation eased that a plan to merge the retailer with Carrefour SA’s Brazilian assets will succeed.
Banco BTG Pactual SA investment fund Gama proposed the merger yesterday, spurring opposition from Carrefour rival Casino Guichard-Perrachon SA, which partly owns Pao de Acucar and called the plan “illegal.” While Casino could veto the deal or seek better terms, the current proposal may value the combined company at 92 reais a share, according to Banco Santander SA.
Brazil’s benchmark equity gauge has lost 15 percent from a November high on concern quickening inflation may hurt domestic demand, while a slowdown in global economic growth could cut the appetite for commodities.
The Bovespa trades at 9.8 times analysts’ earnings estimates, the lowest since March 2009, according to weekly data compiled by Bloomberg. That compares to a ratio of 12.8 for the Shanghai Composite Index, 6.2 for Russia’s Micex and 14.9 for India’s Sensex.
Traders moved 6.6 billion reais in stocks today, data compiled by Bloomberg show. That compares to a daily average this year of 6.5 billion reais, according to data from the exchange.
Investors pulled 1.48 billion reais from Latin America’s largest equity market in the year through June 8, according to the exchange.
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