The Ibovespa rose the most among major global equity gauges as steelmaker Cia. Siderurgica Nacional SA (CSNA3) led gains by commodity producers after manufacturing strengthened in China, Brazil’s top trading partner.
Iron-ore producer Vale SA, whose top export market is the Asian country, advanced to a one-week high. All 10 industry groups on the MSCI Brazil Index rose. Brookfield Incorporacoes SA jumped the most among real estate companies. OGX Petroleo e Gas Participacoes SA, the oil company controlled by Eike Batista, rallied after posting a record plunge on Aug. 30.
The Ibovespa added 3.7 percent to 51,835.15 at the close of trading in Sao Paulo, with 10 stocks gaining for each that fell. It was the biggest one-day advance since July 27, 2012. The real climbed 0.3 percent to 2.3774 per dollar. In China, an official manufacturing gauge reached a 16-month high of 51 and a separate measure from HSBC Holdings Plc and Markit Economics jumped the most in three years to 50.1. Readings above 50 indicate expansion.
“Most of the risk for a China slowdown is already priced in,” Nick Robinson, who manages about $15 billion of Latin American shares as the head of Brazilian equities at Aberdeen Asset Management Plc, said in a telephone interview from Sao Paulo. “China will probably keep growing at a pace that’s fast enough to support commodities prices. The long-term outlook for companies like Vale is very positive.”
Eased concern that a slowdown in China will sap commodities and speculation that a weaker currency will boost Brazil’s exports have fueled a rally in the Ibovespa, which has gained 15 percent since this year’s low on July 3.
The Bloomberg Base Metals 3-Month Price Commodity Index rose 1.4 percent today. CSN jumped 5.3 percent to 8.87 reais, and Vale added 3 percent to 32.02 reais.
OGX surged 33 percent to 40 centavos after tumbling 40 percent on Aug. 30. The stock’s weighting on the Ibovespa increased to 4.26 percent today from 0.92 percent previously after the rebalancing the exchange carries out every four months, data compiled by Bloomberg show. It’s now the fourth-heaviest weighted member on the gauge, according to a statement from BM&FBovespa.
Brookfield rose 7.6 percent to 1.83 reais, leading gains in real estate stocks, as traders pared bets for higher borrowing costs in Brazil amid eased concern that a weaker currency will fuel inflation.
Brazilian swap rates, a gauge of expectations for interest-rate moves, fell on most contracts today. Rates on the contract due in January 2015 retreated one basis point, or 0.01 percentage point, to 10.52 reais.
The BM&FBovespa Real Estate Index advanced 3.5 percent. A report last week from the national statistics agency showed Brazil’s second-quarter gross domestic product expanded 1.5 percent, more than the 0.9 percent economists surveyed by Bloomberg had projected.
The GDP report show “a surprisingly strong rebound in Brazil,” Michael Henderson, an economist at Capital Economics Ltd., wrote in a note to clients today.
BRF SA (BRFS3), the world’s largest meatpacker by market value, rose 0.8 percent to 55.66 reais, the highest on a closing basis in two weeks. The company said on Aug. 30 after markets closed that it plans to buy back as many as 1.38 million shares in the next 15 days.
The Ibovespa trades at 12.7 times analysts’ earnings estimates for the next four quarters, compared with 10.5 for the MSCI Emerging Markets Index of 21 developing nations’ equities. Trading volume for stocks in Sao Paulo was 5.8 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.75 billion reais this year through Aug. 27, according to data compiled by the exchange.
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