Bovespa-Index Futures Fall After Brazil Cuts Power Rates Further

Bovespa (IBOV) stock-index futures fell after Brazil reduced energy costs more than previously announced and policy makers said they will keep borrowing costs at a record low even as inflation exceeds targets.

State-controlled electric utility Centrais Eletricas Brasileiras SA (ELET6) may be active as President Dilma Rousseff said the cuts will pare power rates by as much as 32 percent compared with a reduction of 28 percent she announced in September. University operator Estacio Participacoes SA (ESTC3) may move after raising as much as 768.7 million reais ($377.6 million) in a share offering.

Bovespa-index futures declined less than 0.1 percent to 62,115 at 9:12 a.m. in Sao Paulo. The real was little changed at 2.0363 per dollar.

The power rates reduction “means lower expenses for each of you and for the country’s entire economy,” Rousseff said late yesterday. “We will reduce costs for the productive sector, which means more growth, more production, more jobs.”

The central bank board, led by Alexandre Tombini, kept the benchmark interest rate unchanged at 7.25 percent for a second straight meeting on Jan. 16, matching the forecast of all 56 analysts surveyed by Bloomberg. Brazil will hold the benchmark Selic steady for a “sufficiently prolonged” period, the central bank said in minutes to that meeting released on its website today.

Consumer prices as measured by the IPCA-15 index rose 0.88 percent though mid-January, exceeding the 0.82 percent median forecast of 38 economists, the national statistics agency said yesterday.

The Bovespa entered a bull market on Jan. 3 after rising 21 percent from last year’s low on June 5 as stimulus from central banks around the world eased concern economic growth might miss expectations while borrowing costs at a record low in Brazil boosted equity demand. The index has since pared its advance to 18 percent.

Brazil’s benchmark equity gauge trades at 11.5 times analysts’ earnings estimates for the next four quarters, compared with 11 for MSCI’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume of stocks in Sao Paulo yesterday was 5.9 billion reais, compared with a daily average of 7.25 billion reais in 2012, according to data compiled by the exchange.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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