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Bovespa Posts Weekly Advance on Valuations, Mubarak Resignation

Brazil’s Bovespa stock index surged, posting the first weekly gain in four, as the cheapest valuations in almost two years lured investors and Egyptian President Hosni Mubarak’s resignation sparked a global rally.

Homebuilder Cyrela Brazil Realty SA Empreendimentos e Participacoes jumped the most since May. Tobacco company Souza Cruz SA and cosmetics maker Natura Cosmeticos SA led gains for consumer-goods producers, while Lojas Renner SA paced a rally for retailers. Housing-fixtures maker Duratex SA rallied after JPMorgan Chase & Co. recommended adding to holdings.

The Bovespa index jumped 1.8 percent to 65,755.66 at the 3:15 p.m. New York time close, for a weekly advance of 0.8 percent. Sixty-four stocks rose on the index while five fell. The measure has dropped 9.9 percent from a November high.

“Stocks became attractive, cheap,” said Renato Bandeira de Mello, head of equity at Futura Corretora brokerage in Sao Paulo. “In these declines, there are big buying opportunities, because going forward the market is going to recover.”

Mubarak stepped down as president of Egypt and handed power to the military, bowing to the demands of protesters who have occupied central Cairo for the past three weeks demanding an end to his 30-year rule. U.S. stocks extended gains as the announcement and a jump in consumer confidence bolstered confidence in the economic recovery.

Souza Cruz, Brazil’s biggest tobacco company, gained 1.9 percent to 77.47 reais, its first increase in four days. Natura, Brazil’s biggest cosmetics maker, advanced 3.3 percent to 42.35 reais.

Cyrela, Duratex

Renner, Brazil’s biggest publicly traded clothing retailer, increased 2.8 percent to 51.40 reais while Cyrela, Brazil’s biggest homebuilder by revenue, soared 6.8 percent to 18.58 reais.

Duratex, the Brazilian producer of wood panels and bathroom fixtures, rose the most since May, advancing 5.3 percent to 16.30 reais after JPMorgan rated the company “overweight” in new coverage.

Brazil is the top holding in Templeton Asset Management’s BRIC countries fund, said Mark Mobius, the chairman of Templeton Emerging Markets Group. Speaking at an event in Sao Paulo yesterday, he said Brazil’s real is “clearly” overvalued. That’s “positive” for his investments because it increases the value of dividends, he said.

The real strengthened 0.1 percent to 1.6657 per dollar today.

The Bovespa has fallen 5.1 percent this year on concern rising inflation will spur additional measures to restrict credit growth. The index trades for 10.5 times analysts’ earnings estimates, the cheapest since March 2009, according to weekly data compiled by Bloomberg. That compares to a ratio of 13.1 for the Shanghai Composite Index, 7.4 for Russia’s Micex, and 17.1 for India’s Sensex.

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