Ibovespa Rebounds as Usiminas Gains on Brazilian Export Outlook

The Ibovespa rebounded from its biggest two-day drop since July 2012 as Usinas Siderurgicas de Minas Gerais SA (USIM3) led steelmakers higher, following a rally in commodity prices.

Vale SA (VALE3), the world’s largest iron-ore producer, rose from a four-year low. Cia. Paranaense de Energia, the electricity distributor also known as Copel, gained after Banco Espirito Santo de Investimento SA raised its recommendation to buy.

The Ibovespa rose 2 percent to 46,893.04 at the close of trading in Sao Paulo, paring this month’s decline to 12 percent. The real climbed 0.6 percent to 2.2139 per dollar. The Bloomberg Base Metals 3-Month Price Commodity Index added 1.4 percent as Ling Tao, deputy director of the Shanghai branch of the People’s Bank of China, said the central bank will keep money-market rates at a “reasonable” level and seasonal forces that have driven them up will fade.

“Those remarks from the official from the People’s Bank of China helped to soothe investors,” Luis Gustavo Pereira, an analyst at Futura Corretora in Sao Paulo, said by phone from Sao Paulo. “This is particularly important for Brazil, given that China is a big trading partner.”

Usiminas, as Usinas Siderurgicas is also known, gained 10 percent to 8.24 reais. Steelmaker Gerdau SA advanced 2.1 percent to 12.12 reais. Vale rose 2.3 percent to 27.50 reais. Copel increased 3 percent to 27.19 reais.

Sugar and ethanol producer Sao Martinho SA (SMTO3) fell 1.8 percent to 25.53 reais after posting a quarterly profit that missed analysts’ estimates.

China Concern

Airline Gol Linhas Aereas Inteligentes SA (GOLL3) gained 11 percent to 7.50 reais, snapping a six-day losing streak, the longest since April 2012.

MMX Mineracao & Metalicos SA, Eike Batista’s mining company, jumped 18 percent to 1.65 reais in a second day of gains as it seeks to sell assets to raise cash.

Fifty-eight stocks climbed on the Ibovespa today while 11 fell. The benchmark dropped 4.7 percent in the previous two sessions amid concern that slowing growth in China would sap Brazilian exports. The gauge slumped into a bear market on June 11 after falling more than 20 percent from this year’s peak on Jan. 3. It has since extended the loss to 26 percent.

Toll-road operator CCR SA (CCRO3) added 3.1 percent to 16.75 reais, snapping a five-day rout that drove shares 11 percent lower. Competitor EcoRodovias Infraestrutura e Logistica SA gained 1.7 percent to 14.75 reais today.

Stocks in the industry are attractive in part because they are shielded from the real’s tumble, JPMorgan Chase & Co. analysts Fernando Abdalla and Carlos Louro wrote in a research note to clients today.

Street Protests

“We see a buying opportunity for investors seeking exposure to a relatively stable, inflation-protected sector, combined with little exposure to” currency depreciation, the JPMorgan analysts wrote. The real has tumbled 8.7 percent in the second quarter.

Toll-road operators sank yesterday after the state of Sao Paulo canceled toll increases of as much as 6.5 percent after street protests demanding improved transportation, better schools and more hospitals.

The Ibovespa trades at 11.6 times analysts’ earnings estimates for the next four quarters, compared with 9.6 for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Foreign investors have pulled 4.93 billion reais from Latin America’s largest equity market this month through June 20, data from the exchange show. Trading volume for stocks in Sao Paulo was 6.96 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.92 billion reais this year through June 21, according to data compiled by the exchange.

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

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