Brazil’s Bovespa stock index gained the most in a week after Goldman Sachs Group Inc. said the measure will rally to a record this year and economists increased forecasts for economic growth.
Empresa Brasileira de Aeronautica SA, the world’s fourth-largest planemaker, gained the most in two weeks on speculation U.K. airline Flybe may order more jets. Petroleo Brasileiro SA, Brazil’s state-controlled oil company, gained as crude prices jumped. Rossi Residencial SA and Lojas Renner SA led gains for homebuilders and retailers as economists in a central bank survey increased estimates for economic growth.
“Domestic growth is strong,” said Carlos Eduardo Ramos, who helps oversees 12 billion reais ($6.93 billion) as senior portfolio manager for BNY Mellon Arx in Rio de Janeiro. “What’s holding us back are doubts about growth in the U.S. and abroad.”
The Bovespa index rose 1.6 percent to 68,190.46. Sixty stocks gained on the index while eight fell. The BM&FBovespa Small Cap index added 0.7 percent to 1,342.77. The real fell 0.6 percent to 1.7316 per dollar, from 1.7213 on Sept. 17.
Brazilian economists expect the economy to grow 7.47 percent in 2010, from a previous estimate of 7.42 percent, according to a weekly survey by the central bank published today. Brazilian inflation will end 2011 at 4.95 percent, up from a week earlier forecast of 4.90 percent, the survey showed.
Dilma Rousseff, the chosen successor of President Luiz Inacio Lula da Silva, may bring “continuity” and seek to contain government spending if she wins elections next month, according to Goldman Sachs. Support for the former cabinet chief is at 51 percent, compared to 25 percent for her closest competitor, according to an Ibope poll published Sept. 17.
“Timing for a rally seems propitious because obstacles that have blocked markets are being removed, while earnings are robust and estimates we think will rise further,” Stephen Graham and Andre Rezende, analysts at Goldman Sachs, wrote in a note to clients today. “The implications of flat rather than rising interest rates into 2011 are sinking in.”
Rossi gained 3.4 percent to 16.38 reais. Lojas Renner advanced 2.8 percent to 56.29 reais.
Embraer gained 3.9 percent to 12.15 reais. Flybe, the U.K.’s biggest domestic carrier, in July ordered 35 Embraer jets worth $1.3 billion, with options for 65 planes and “purchase rights” for a further 40. The airline’s Chief Executive Officer Jim French said today the company is in talks to make two acquisitions to expand in Europe, boosting the prospects for increasing jet orders, according to Rosangela Ribeiro of SLW Corretora.
“If that outlook exists, the effect on the stock is positive, because it improves the order backlog,” said Ribeiro, an analyst at the Sao Paulo-based brokerage, who recommends buying Embraer’s shares.
Petrobras rallied 2.5 percent to 27.10 reais. Crude rose for the first time in five days after equities advanced, signaling that economic growth will accelerate.