Cyrela Brazil Realty SA, Brazil’s biggest homebuilder by market value, rose to a five-week high as booked sales recovered and a report showing slowed inflation reduced prospects for steeper increases in interest rates.
Shares climbed 2 percent to 16.37 reais at 1:12 p.m. in Sao Paulo after earlier advancing as much as 4.7 percent to the highest intraday price since June 7. MRV Engenharia e Participacoes SA, Brazil’s third-biggest homebuilder, rallied 3.1 percent to 6.70, the best performance on the Ibovespa, after reporting an increase in quarterly booked sales. The benchmark equity gauge fell 0.6 percent.
Cyrela’s sales gain in the second quarter is a sign that homebuilders began to rebound after Brazil’s slowdown reduced revenue, according to Sandro Fernandes, a trader at brokerage Geraldo Correa.
“We notice that all these companies are making a lot of effort to sell their inventories, and that seems to be paying off,” Fernandes said by phone from Belo Horizonte, Brazil.
Booked sales of Cyrela soared 66 percent to 2.18 billion reais ($970 million) in the second quarter from a year earlier, according to a regulatory filing yesterday. In the three months through June last year, contracted sales had fallen 21 percent from 2011. MRV’s booked sales rose 47 percent to 1.38 billion reais in the second quarter from a year earlier.
Swap rates fell today as wholesale, construction and consumer prices rose in the month ended July 10 at a slower pace, damping speculation that the central bank will increase borrowing costs at a faster place.
Consumer, wholesale and construction prices as measured by Fundacao Getulio Vargas’ IGP-10 index rose 0.43 percent in July from June, below the median estimate of 0.56 percent among 21 analysts surveyed by Bloomberg. Swap rates on contracts due in January 2015 fell 0.04 percentage point to 9.51 percent.
As inflation slows, prospects for homebuilders improve, Fernandes said. “That means policy makers won’t have to raise interest rates as much as previously estimated, which is good for companies that depend on financing to sell,” he said.
Brazil’s central bank raised the target lending rate by a half-percentage point to 8.50 percent on July 10 in the third increase this year from a record low 7.25 percent. The next meeting is scheduled for Aug. 27-28.
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