Banco Bradesco SA (BBDC4), Brazil’s second-biggest bank by market value, rallied to a three-month high on speculation it will get a heavier weighting on the Ibovespa index when the benchmark is rebalanced in May.
The shares gained 2.2 percent to 29.51 reais at the close of trading in Sao Paulo, the highest since Dec. 3. Itau Unibanco Holding SA (ITUB4), Brazil’s biggest bank, gained 0.9 percent to 32.73 reais, its eighth straight advance, the longest winning streak since 2009.
Itau and Bradesco will probably be the heaviest-weighted stocks on the Ibovespa, topping Vale SA and Petroleo Brasileiro SA (PETR4), after the exchange starts ranking index members by market value instead of trading volume, Banco Santander SA analyst Renata Cabral wrote in a research note to clients.
“This is definitely helping push the stocks higher,” Joao Pedro Brugger, who helps oversee 400 million reais ($173 million) as a portfolio manager at Leme Investimentos said in a phone interview from Florianopolis, Brazil. “While the exchange has already announced the changes in the index, I don’t think prices are reflecting that. Funds that use the Ibovespa as a benchmark will have to go through big adjustments.”
BM&FBovespa SA (BVMF3), the exchange operator, said in September that it would start weighing Ibovespa’s members based on market value. The change was made after Eike Batista’s oil producer, then known as OGX Petroleo & Gas Participacoes SA, remained one of the heaviest-weighted stocks even as shares plunged.
Itau and Bradesco will probably have weightings of 9.3 percent and 6.9 percent after the next rebalancing, Santander projected. Preferred shares of Vale and Petrobras would account for 6.4 percent and 6.2 percent, Santander said.
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