Ibovespa Rises to Three-Week High as Petrobras, Eletrobras Rally

The Ibovespa climbed to a three-week high as state-run companies including oil producer Petroleo Brasileiro SA (PETR4) rallied on speculation a poll will show diminished support for President Dilma Rousseff’s re-election.

Power utility Centrais Eletricas Brasileiras SA (ELET6), which is also run by the federal government, climbed to the highest level since January. State-run lender Banco do Brasil SA posted the biggest one-day gain since November 2012. Water company Cia. de Saneamento Basico do Estado de Sao Paulo dropped the most on the index after UBS AG lowered its recommendation to sell.

The Ibovespa rose 1.5 percent to 47,278.48 at the close of trading in Sao Paulo, with 52 stocks higher and 19 lower. The real strengthened 1 percent to 2.3274 per U.S. dollar at 5:30 p.m. local time.

“Rousseff’s administration was a disaster for state-run companies such as Petrobras,” Pedro Galdi, the head strategist at brokerage SLW Corretora in Sao Paulo, said in a phone interview. “There’s a lot of room for a rebound for the shares if indeed the opposition wins the election.”

Rousseff’s press office didn’t respond to an e-mail seeking comment on Galdi’s remarks.

Polling company Ibope’s press office said a survey on Brazil’s elections scheduled for October may be published today. An Ibope survey published Feb. 21 in the Estado de S. Paulo newspaper showed Rousseff’s government approval rating fell to 39 percent from 43 percent in December.

Petrobras gained 4.9 percent to 13.99 reais. The stock has tumbled 49 percent since Rousseff took office in January 2011 as fuel subsidies ordered by the government cut into the company’s profit. Voting shares of Eletrobras surged 4.3 percent to 5.77 reais. Banco do Brasil jumped 5.4 percent to 20.90 reais.

Fed Tapering

The Ibovespa earlier dropped as much as 0.9 percent after the Federal Reserve signaled yesterday a faster timetable for raising U.S. interest rates, pushing commodities lower and sapping the outlook for Brazil’s raw-material exports.

Sabesp, as Cia. de Saneamento is known, sank 7.5 percent to 19.61 reais. The company’s earnings will probably be affected by its decision to give discounts to clients that save water as a drought in Brazil saps reservoirs, UBS analyst Lilyanna Yang wrote in a research note.

Homebuilder EZ Tec Empreendimentos e Participacoes SA advanced 3.4 percent to 26.99 reais after posting fourth-quarter adjusted net income of 159.5 million reais, which compares with an average estimate of 138.8 million reais among analysts surveyed by Bloomberg.

Brazil’s benchmark equity gauge entered a bear market on March 14 after falling 20 percent from its October 2013 high through that day. The gauge has since pared the drop to 16 percent. Trading volume of stocks in Sao Paulo was 7.58 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 the exchange.

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

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

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