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Brazilian Stocks Rebound as Hypermarcas Rises on Rates Outlook

The Bovespa (IBOV) snapped a three-day losing streak after a central bank survey showing a lower growth forecast for Brazil’s economy spurred bets that policy makers will cut borrowing costs further to boost the recovery.

Consumer-goods maker Hypermarcas SA (HYPE3) rose the most in two weeks, leading gains of companies that sell in the local market. Gafisa SA (GFSA3) was the best performer among homebuilders as the BM&FBovespa Real Estate Index (IMOBBV) increased for a third day. Card- payment processor Cielo SA (CIEL3) advanced after saying it completed the acquisition of U.S.-based Merchant e-Solutions.

The Bovespa added 0.4 percent to 57,281.45 at the close of trading in Sao Paulo. Thirty-nine stocks increased on the gauge while 28 fell. The real weakened 0.1 percent to 2.0316 per U.S. dollar. Brazilian swap rates dropped after the median forecast for economic growth this year according to about 100 analysts surveyed by the central bank fell to 1.64 percent, from 1.73 percent the previous week.

“Even at a record low, the benchmark Selic rate at current levels won’t be enough to make the economy grow as fast as the government expects next year,” Clodoir Vieira, an economist at Sao Paulo-based brokerage Souza Barros Corretora, said in a phone interview. “There’ll probably be more stimulus in the coming months.”

Brazil’s central bank, led by President Alexandre Tombini, has cut the benchmark Selic lending rate by 5 percentage points since August 2011 to a record 7.5 percent in an attempt to shore up growth in Latin America’s largest economy.

Gafisa advanced 2 percent to 4.13 reais. Hypermarcas jumped 3.2 percent to 13.44 reais. Cielo climbed 2.3 percent to 61.40 reais.

Global Growth Concern

The Bovespa earlier fell as much as 0.2 percent after signs of a deeper slowdown in China and Europe added to concern that a worsening global outlook will curb demand for Brazilian equities.

A gauge of manufacturing in the euro area based on a survey of purchasing managers was revised lower to 45.1 in August from the reading of 45.3 estimated earlier, London-based Markit Economics said today. In China, manufacturing slowed further in August, surveys of purchasing managers showed Sept. 1 and today, with one gauge at the lowest level since March 2009.

“Problems in Europe persist, China is growing at a slower pace, all these issues are deepening and there’s no solution in sight,” Marcio Cardoso, a partner at brokerage Titulo Corretora de Valores in Sao Paulo, said by phone.

Index Valuation

The Bovespa has climbed 9.1 percent from this year’s low on June 5 as concerns eased about Europe’s debt crisis and borrowing costs at a record low in Brazil boosted demand for equities. The index trades at 11.6 times analysts’ earnings estimates for the next four quarters, which compares with the ratio of 10.8 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 3.9 billion reais ($1.9 billion) in stocks in Sao Paulo, data compiled by Bloomberg show. That compares with a daily average of 7.19 billion reais this year through Aug. 31, according to data compiled by the exchange. Trading volume today was lower than usual in Sao Paulo because U.S. markets are closed for a holiday, Souza Barros’ Vieira said.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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