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Bovespa Stock Index Rises as Weaker Real Boosts Exports Outlook

Sept. 16 (Bloomberg) -- The Bovespa stock index rose for a third day as the real’s biggest weekly slide in 16 months bolstered the outlook for companies that depend on exports.

Pulp producer Fibria Celulose SA, whose exports accounted for 84 percent of its second-quarter sales, posted its biggest weekly advance since July 2010. Car-parts maker Autometal SA rose to a six-week high after the government raised a tax on vehicles with a high content of imported components to protect jobs.

Voting shares of Usinas Siderurgicas de Minas Gerais SA posted the worst performance on the gauge after rival Gerdau SA said in a regulatory filing it hasn’t made any offer to buy a stake.

The Bovespa rose 1.5 percent to 57,210.11 at the close of trading at 4:15 p.m. New York time. Fifty-nine stocks gained on the index, while seven fell. The measure climbed 2.6 percent this week. The real weakened 1.6 percent to 1.7346 per U.S. dollar.

“A weaker currency may boost revenues of companies that depend more heavily on exports,” Pedro Galdi, head strategist at SLW Corretora brokerage, said in a telephone interview from Sao Paulo. “Steelmakers, pulp producers and Vale are stocks that gain with the real’s decline.”

The Brazilian currency fell for a fourth week as European finance ministers ruled out efforts to prop up the region’s faltering economy and gave no indication of providing aid for lenders to go along with yesterday’s liquidity lifeline from the European Central Bank.

No Room for Cuts

Clashing with U.S. Treasury Secretary Timothy Geithner, finance chiefs from the euro region said the 18-month debt crisis leaves no room for tax cuts or extra spending to spur an economy on the brink of stagnation.

“We have slightly different views from time to time with our U.S. colleagues when it comes to fiscal stimulus packages,” Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing today’s trans-Atlantic finance meeting in Wroclaw, Poland. “We don’t see any room for maneuver in the euro area which could allow us to launch new fiscal stimulus packages. That will not be possible.”

Attending a euro crisis meeting for the first time, Geithner said Europe projects an image of “ongoing conflict” between national governments and the central bank, hampering efforts to put the economy on a sounder footing.

Fibria, Usiminas

Fibria rose 2.8 percent to 17.40 reais. The stock rose 13 percent this week.

Voting shares of Usiminas, as Usinas Siderurgicas is known, fell 1 percent to 23.85 reais.

Autometal, the Brazilian unit of Spanish auto-parts maker Cie Automotive SA, increased 5.1 percent to 13.65 reais after earlier jumping as much as 11 percent, the most intraday since the company’s initial public offering in February.

Finance Minister Guido Mantega increased by 30 percentage points the so-called industrial products tax on carmakers that don’t source 65 percent of their parts from the Mercosur trade bloc or Mexico. The measure will raise the cost of imported cars by as much as 28 percent, and force foreign automakers to build key components in Brazil, he told reporters yesterday.

The Bovespa entered a bear market on July 27 after plunging 20 percent from its bull-market peak in November. The measure has since extended that drop to 22 percent and trades at 9.5 times analysts’ earnings estimates, according to weekly data compiled by Bloomberg. That compares to a ratio of 11.5 for the Shanghai Composite Index, 5.7 for Russia’s Micex and 14.2 for India’s Sensex.

Traders moved 5.25 billion reais ($3.03 billion) in stocks in Sao Paulo today, data compiled by Bloomberg show. That compares to a daily average this year of 6.55 billion reais through Sept. 6, 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 editor responsible for this story: David Papadopoulos in New York at papadopoulos@bloomberg.net

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