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Ibovespa Advances on Valuation as MRV Leads Homebuilders’ Rally

The Ibovespa gained as MRV Engenharia e Participacoes SA (MRVE3) led homebuilders higher amid speculation back-to-back losses in the benchmark index that pushed its valuation to a one-week low may have been excessive.

The BM&FBovespa Real Estate Index rose to the highest in six weeks. Steelmaker Gerdau SA (GGBR4) followed metals higher after a report showed jobless claims in the U.S. dropped to a three-month low last week. Consumer-health products manufacturer Hypermarcas SA climbed after trading yesterday at the cheapest price relative to its projected earnings since 2012.

The Ibovespa rose 1.1 percent to 47,093.13 at the close of trading in Sao Paulo, with 51 stocks higher and 18 lower. The gauge dropped 2.1 percent in the previous two sessions, pushing its price-to-forecast earnings ratio to 9.17 times yesterday, the lowest level since Feb. 26.

“After recent losses, we may see some gains today as valuation lures a few buyers,” Gustavo Mendonca, an economist at Saga Capital, said in a phone interview from Rio de Janeiro. “In the U.S., the latest data available seemed positive, which helps to drive global stocks higher.”

The Ibovespa has tumbled 17 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.

MRV jumped 5.3 percent to 8.40 reais as the BM&FBovespa Real Estate Index climbed 2 percent. Hypermarcas advanced 0.8 percent to 14.52 reais.

Metals Gain

Gerdau added 0.6 percent to 14.44 reais. The Bloomberg Base Metals 3-Month Price Commodity Index climbed 0.6 percent. Jobless claims in the U.S. declined by 26,000 to 323,000 in the week ended March 1, fewer than economists surveyed by Bloomberg had forecast and the least since the end of November, a Labor Department report showed today in Washington.

Gains in Brazilian stocks may be limited in the longer term as higher borrowing costs reduce demand for equities, Mendonca said. The central bank signaled today in the minutes of its last policy meeting it will continue boosting the benchmark lending rate as above-target inflation remains persistent.

Trading volume of stocks in Sao Paulo was 5.9 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.34 billion reais this year, according to data from BM&FBovespa SA.

To contact the reporter on this story: Ney Hayashi in Sao Paulo at ncruz4@bloomberg.net

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

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