Brazil Share Buyback Plans Grow to $238 Million After Global Market Plunge

Brazilian phone operator Telecomunicacoes de Sao Paulo SA (TLPP3) and homebuilder MRV Engenharia & Participacoes SA said they plan to buy back shares after concern the global economy is sinking into recession sparked the biggest selloff since the 2008 financial crisis.

They join at least three other Brazilian companies in announcing buybacks in the past two weeks, for a total of as much as 388.1 million reais ($237.8 million), data compiled by Bloomberg and Sao Paulo-based brokerage Link Investimentos show. In the U.S., more executives at Standard & Poor’s 500 Index companies are buying their stock than at any time since March 2009. MRV’s move is a “positive market signal,” analysts at JPMorgan Chase & Co. said in a note to clients.

After $6.8 trillion was erased from global market value this month, with Brazil accounting for $245.3 billion of the total, valuations in Latin America’s largest equity market fell to the lowest in 2 1/2 years. The benchmark Bovespa index plunged 17 percent in the five days through Aug. 8, driving its price down to 8 times estimated earnings, data compiled by Bloomberg show.

“It’s a great sign because if the company thinks the stock is cheap, it’s going to know better than anyone,” said Otavio Vieira, who helps manage 1.5 billion reais ($922 million) at Safdie Private Banking in Sao Paulo.

Bear Market

The Bovespa rose 2.1 percent to 52,490.68 at 10:54 a.m. New York time today, trimming its drop this week to less than 1 percent. Brazil’s benchmark equity gauge entered a bear market July 27 after falling 20 percent from its November 2010 peak on concern quickening inflation and slowing global growth will hurt corporate earnings.

Further declines may still come as investors assess the impact of Europe’s debt crisis on global growth, said Allan Hadid, who helps oversee about 4 billion reais as chief executive officer of BRZ Investimentos.

“Is 50,000 the bottom for the Bovespa?” Hadid said in an interview in Sao Paulo yesterday. “Nobody knows. It’s cheap -- could it be cheaper? Yes.”

Telesp, Telefonica SA’s Brazil unit, said in a filing today it plans to buy as many as 2.7 million preferred shares through Oct. 20, valued at 120.7 million reais at yesterday’s closing price. MRV, Brazil’s fifth-largest real-estate company by sales, said it plans to buy as many as 10 million common shares during the next year, valued at 110.3 million reais, according to a filing last night.

Insider Buys

Sixty-six insiders at 50 companies on the S&P 500 bought shares between Aug. 3 and Aug. 9, the most since the five days ended March 9, 2009, when the benchmark index for U.S. equities reached a 12-year low, according to data compiled by Bloomberg.

Eduardo Guardia, chief financial officer of BM&FBovespa SA (BVMF3), told reporters in Sao Paulo yesterday that the exchange plans to purchase as many as 23.5 million shares by the end of the year after having completed 22 percent of a 30 million-share buyback announced in June.

Marcopolo SA (POMO4), Brazil’s biggest bus maker, said Aug. 8 it would buy stock valued at 20.8 million reais at that day’s closing price over the next 120 days. Real-estate company Cyrela Commercial Properties SA Empreendimentos & Participacoes said Aug. 4 it would buy back as much as 75 million reais of shares within a year. Bradespar SA (BRAP3), a holding company that owns a stake in miner Vale SA, said July 27 it will purchase common and preferred shares valued at as much as 61.3 million reais at that day’s closing price.

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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