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Bovespa Rises to One-Month High as Stimulus Bets Boost Gafisa

The Bovespa index rose to a one-month high on speculation policy makers will take further steps to shore up growth even after a report showed inflation unexpectedly accelerated in November.

Homebuilder Gafisa SA led gains by companies that sell in the local market, and the MSCI Brazil/Consumer Discretionary Index had the biggest weekly advance among 10 industry groups. Vale SA and MMX Mineracao & Metalicos SA followed iron-ore prices higher.

Brazil’s benchmark equity gauge added 1.4 percent to 58,487.32 at the close of trading in Sao Paulo, bringing this week’s rally to 1.8 percent. Fifty-two stocks rose on the gauge today while 14 fell. Annual inflation as measured by the IPCA index accelerated to 5.53 percent in November from 5.45 percent in the prior month, the statistics agency reported. The median forecast of economists surveyed by Bloomberg was for a 5.42 percent pace.

“The government has already announced some initiatives this week and will probably follow with more if signs of disappointing growth keep coming,” Rogerio Freitas, a partner at Rio de Janeiro-based hedge fund Teorica Investimentos, said by phone. “We see inflation under pressure, but the central bank seems to be comfortable as long as it keeps floating around 5.5 percent.”

The real appreciated 0.1 percent to 2.0751 per U.S. dollar.

Lower Taxes

Brazil lowered taxes this week for the real estate sector, exempted exporters from a 6 percent tax on some loans and announced measures to increase private investment in its port system to revive growth after a Nov. 30 report from the national statistics agency showed third-quarter gross domestic product expanded at half the pace forecast by economists in a Bloomberg survey.

“Third-quarter growth was disappointing, but if the government acts soon enough, the economy may post a stronger recovery in 2013,” Rodolfo Amstalden, an analyst at consulting firm Empiricus Research, said by phone from Sao Paulo.

Gafisa rose 6.6 percent to 4.88 reais. PDG Realty SA Empreendimentos & Participacoes advanced 4.4 percent to 3.31 reais, extending this week’s gain to 10 percent, the most in three months.

Vale rose 0.9 percent to 36.92 reais. MMX gained 4.6 percent to 3.85 reais. Iron ore for immediate delivery jumped 2.2 percent to $121 a dry ton, according to a price index compiled by The Steel Index Ltd.

U.S. Jobs

The Bovespa index extended gains after a U.S. report showed employers added more jobs in November than forecast and the jobless rate fell to 7.7 percent.

Faster growth in Brazil and in the U.S. will probably help the Bovespa index rise to 66,000 in 2013, Amstalden said.

The Bovespa has climbed 11 percent from this year’s low on June 5 as stimulus from central banks around the world eased economic concern and borrowing costs at a record low in Brazil boosted equity demand. The index trades at 10.9 times analysts’ earnings estimates for the next four quarters, compared with 11 times for MSCI Inc.’s measure of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume was 5.68 billion reais in stocks in Sao Paulo today, according to data compiled by Bloomberg. That compares with a daily average of 7.2 billion reais this year through Dec. 5, according to data compiled by the exchange.

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