Ibovespa Touches 16-Week High as Vale Gain Offsets Utility Drop

The Ibovespa touched a 16-week high as a gain in commodity prices boosted Brazilian exporters including iron-ore producer Vale SA, offsetting losses in electric utilities.

Pulp producer Suzano Papel & Celulose SA rose the most on the MSCI Brazil/Materials Index. (CMCIPI) Homebuilders including Rossi Residencial SA (RSID3) advanced as traders pared bets for higher borrowing costs. Cia. Energetica de Minas Gerais led power utilities lower after O Estado de S.Paulo reported that Brazil plans to change the rules used to grant license renewals.

The Ibovespa was little changed at 54,309.08 at 11:09 a.m. in Sao Paulo after earlier rising to 54,419.09, the highest level on a closing basis since May 29. The real climbed 0.4 percent to 2.2479 per dollar. The UBS Bloomberg Constant Maturity Commodity Index of 27 raw materials advanced 0.2 percent as investors awaited a Federal Reserve announcement on the prospects for U.S. monetary stimulus that has buoyed demand for riskier assets including Brazilian stocks.

“Everyone is waiting to see what the Fed will do, and while we can’t rule out anything, it doesn’t look like assets are pricing in a drastic reduction in stimulus,” Luis Gustavo Pereira, the head strategist at Futura Corretora brokerage, said in a phone interview from Sao Paulo. “Utilities are having a hard time today because of all the concern that, once again, the government will change the rules for these companies.”

Brazil plans to demand that electricity distributors with licenses expiring between 2015 and 2017 boost investment and meet targets for service quality when applying for a renewal, O Estado de S.Paulo reported today, citing an unidentified aide to President Dilma Rousseff.

Vale, the heaviest-weighted stock on the Ibovespa, gained 0.6 percent to 33.16 reais. Suzano advanced 1.6 percent to 9.50 reais. Rossi jumped 2 percent to 3.09 reais. Cemig, as Energetica de Minas Gerais is also known, dropped 1.8 percent to 18.29 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

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