Bovespa Rises as Interest-Rate Outlook Lifts Homebuilders

The Bovespa index gained as traders pared expectations for interest-rate increases in Brazil, boosting companies that sell on credit.

Homebuilder MRV Engenharia e Participacoes SA gained after reporting that revenue rose 34 percent in the three months ending in March. Competitors Brookfield Incorporacoes SA (BISA3) and PDG Realty SA Empreendimentos e Participacoes also advanced.

The Bovespa index added 1.2 percent to 53,802.62 at 10:24 a.m. in Sao Paulo, reducing this week’s slump to 2.1 percent. Fifty-four of the 69 stocks on the gauge advanced today. The real strengthened 0.3 percent to 2.0131 per dollar. Interbank deposit futures rose after policy makers raised borrowing costs less than some analysts had forecast, fueling speculation that interest rate increases this year may be limited.

“Looks like now the market is expecting the central bank will increase rates in small dosages, which is giving some momentum to the Bovespa,” Hamilton Moreira, a strategist at Banco do Brasil SA, said by phone from Sao Paulo.

The central bank’s board this week voted 6 to 2 to raise the target lending rate by 25 basis points to 7.50 percent from a record low 7.25 percent. A survey by Bloomberg showed that 18 of 58 analysts forecast an increase of 50 basis points. Swap rates on the contract due in January dropped five basis points, or 0.05 percentage point, to 7.79 percent.

MRV jumped 4 percent to 8.89 reais. Brookfield climbed 3.3 percent to 2.18 reais. PDG Realty rose 2.5 percent to 2.48 reais.

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

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

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.