Ibovespa Approaches Bull Market as Vale Gain Outweighs OGX Drop

The Ibovespa approached a bull market as better-than-forecast economic data in China boosted Brazilian commodity exporters including iron-ore producer Vale SA, outweighing a plunge by OGX Petroleo e Gas Participacoes SA.

Metalurgica Gerdau SA (GOAU3), the parent of Latin America’s biggest steelmaker, was the best performer on the MSCI Brazil/Materials index. State-controlled oil producer Petroleo Brasileiro SA rose to a two-week high. OGX weighed on the index after founder Eike Batista challenged the oil producer’s decision to exercise a put option requiring him to inject as much as $1 billion into the company.

The Ibovespa climbed 0.6 percent to 54,085.67 at 12:12 p.m. in Sao Paulo after rising to as high as 54,123.30. It was the second session in which the benchmark advanced to 20 percent above its July 3 bear market low in intraday trading.

“I see a better outlook for equities, as there are signs that growth is picking up around the world,” Alvaro Bandeira, a partner at Orama Asset Management, said in a phone interview from Rio de Janeiro. “The Ibovespa suffers from what happens with OGX, but if you take this one out, the trend is positive.”

In China, exports rose 7.2 percent in August from a year earlier, the General Administration of Customs said in Beijing. That exceeded the 5.5 percent median estimate of analysts surveyed by Bloomberg. Inflation stayed below a government target, according to the national statistics bureau.

Vale gained 2.3 percent to 32.93 reais, contributing the most to the Ibovespa’s advance. A close at that price would be the highest in four months. Metalurgica Gerdau rose 4.3 percent to 21.89 reais. Petrobras, as Petroleo Brasileiro is also known, climbed 1.4 percent to 18 reais.

OGX Sinks

OGX, the third-heaviest weighted stock on the benchmark index, plunged 13 percent to 45 centavos. The stock surged 27 percent on Sept. 6 after the company called the put option that Batista pledged last year.

“I reserve the rights provided to me by the contract and law in the sense of questioning the circumstances, form, content, legitimacy and other legal aspects of the intended exercising of the option,” Batista wrote in a letter to OGX disclosed in a regulatory filing today.

Rossi Residencial SA (RSID3) rose 4.7 percent to 3.12 reais, leading gains by homebuilders as a gain by the real eased concern that a weaker currency will fuel inflation and prompt policy makers to step up the pace of interest-rate increases.

Anhanguera, Pao de Acucar

The real strengthened 1 percent to 2.2844 per dollar. Brazilian swap rates on contracts due in January 2015 fell nine basis points, or 0.09 percentage point, to 10.20 percent.

Anhanguera Educacional Participacoes SA (AEDU3) dropped 1.3 percent to 13.90 reais after Banco Itau BBA SA cut its recommendation on the education company to the equivalent of hold. Cia. Brasileira de Distribuicao Grupo Pao de Acucar, Brazil’s biggest retailer, fell 1.1 percent to 97.50 reais as Abilio Diniz, son of the company’s founder, resigned as chairman.

The Ibovespa has dropped 21 percent in dollar terms this year, compared with a decline of 7.9 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities in the same period.

Trading volume of stocks in Sao Paulo was 8.67 billion reais on Sept. 6, compared with a daily average of 7.72 billion reais this year through Sept. 4, 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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