Ibovespa Rises as Brazilian Inflation Report Boosts Homebuilders

The Ibovespa advanced for a fourth straight day as traders pared bets on higher borrowing costs in Brazil after a report showed lower-than-forecast inflation, boosting the outlook for real-estate companies.

Homebuilders Gafisa SA (GFSA3) and BR Properties SA led gains on the benchmark gauge. Papermaker Klabin SA (KLBN4) rose after announcing a share buyback program.

The Ibovespa added 0.2 percent to 51,269.69 at 10:34 a.m. in Sao Paulo, with 37 stocks higher and 31 lower. The real strengthened 0.4 percent to 2.3098 per U.S. dollar. Brazilian swap rates, a gauge of expectations for interest rates, dropped on most contracts after the Getulio Vargas Foundation reported that wholesale, construction and consumer prices climbed 0.32 percent in the 10 days starting Nov. 21. The median forecast was for an increase of 0.41 percent.

“Slower inflation could make the central bank reduce the pace of increases in its benchmark interest rate, which is good for companies that sell in the country and helps the stock market to get more money from investors who were in fixed income,” Sandro Fernandes, a trader at the brokerage firm Geraldo Correa, said in a telephone interview from Belo Horizonte, Brazil.

Policy makers have boosted borrowing costs by 2.75 percentage points since April to combat inflation that has remained above the government’s 4.5 percent target for more than three years.

Gafisa Gain

Gafisa added 3.2 percent to 3.51 reais, approaching a two-month high, as BR Properties gained 2.2 percent to 18.99 reais. Klabin rose 0.7 percent to 12.06 reais.

Brazil’s benchmark equity index entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 25 percent in dollar terms this year, compared with a decline of 4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 4.59 billion reais yesterday, compared with a daily average of 7.48 billion reais this year through that day, according to data available from the exchange.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

To contact the editor responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net

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