Bovespa Advances as PDG Leads Rally in Homebuilders

The Bovespa index rose to its highest level in a week after a shareholder offered to invest 800 million reais ($405.2 million) in PDG Realty SA Empreendimentos & Participacoes, sparking a rally in real estate companies.

PDG was the best performer on the gauge, and the BM&FBovespa Real Estate Index advanced to a two-week high. Iron-ore producer Vale SA and oil producer Petroleo Brasileiro SA followed metals and crude higher as concern Greece may leave the euro currency bloc eased, fueling gains in commodities.

Brazil’s benchmark equity measure added 1.4 percent to 55,212.69 at the close in Sao Paulo, the highest level since May 21. Fifty-nine stocks rose while eight fell. The real strengthened 0.2 percent to 1.9830 per U.S. dollar. The Bloomberg Base Metals 3-Month Price Commodity Index climbed 0.5 percent.

“Homebuilders’ recent underperformance may have made some people see those stocks as attractive again, spurring a recovery,” Marcelo Varejao, an analyst at Socopa Corretora brokerage, said by phone from Sao Paulo. “This doesn’t mean that the outlook for the companies suddenly improved. It’s just that the recent drop may have been a bit excessive.”

PDG jumped 5 percent to 3.78 reais, paring this year’s plunge to 36 percent. Shareholder Vinci Partners Investimentos Ltda. proposed to invest in Brazil’s biggest homebuilder by revenue by issuing warrants that may be convertible into shares and bonds, according to a regulatory filing today. The offer amounts to 4.02 reais per share.

PDG’s competitor Rossi Residencial SA rose 2.8 percent to 5.95 reais as the BM&FBovespa Real Estate Index increased 3.2 percent, extending gains over the pst three sessions to 7.8 percent.

Commodities Gain

Vale rose 1 percent to 36.10 reais, and Petrobras, as Petroleo Brasileiro is known, advanced 1 percent to 18.79 reais.

Commodities rallied after Greece’s New Democracy party, which supports a European Union rescue, placed first in all six opinion polls published May 26, easing concern a new government may take the nation out of the euro currency union and deepen the region’s debt crisis. General elections are scheduled for next month.

“Greek polls showing a pro-bailout party rising spurred optimism in the global markets,” Gustavo Mendonca, who helps oversee 250 million reais as an economist at Oren Investimentos, said by phone from Rio de Janeiro. “Problems around Europe still persist. But if Greece manages to survive past the election, some of the pessimism we’ve seen in the past few weeks may be reversed.”

CCR Rises

Cia. de Concessoes Rodoviarias, Brazil’s biggest toll-road operator, gained 2.3 percent to 15.22 reais. The company said in a regulatory filing it agreed to buy a stake in Ecuador’s Quito International Airport for $140 million.

The Bovespa entered a bear market on May 17 after tumbling 21 percent from this year’s high on March 13 through that day. The gauge has since pared that drop to 19 percent and trades at 9.2 times analysts’ earnings estimates for the next four quarters, which compares with the 9.7 ratio for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 3.09 billion reais in stocks today, data compiled by Bloomberg show. That compares with a daily average of 7.27 billion reais this year through May 25, according to data from the exchange.

(Corrects Bovespa closing level in third paragraph.)
Before it's here, it's on the Bloomberg Terminal. LEARN MORE