The Ibovespa stock benchmark rose the most in two weeks as iron-ore producer Vale SA led gains in Brazilian raw-material exporters amid eased concern that growth will falter in China, the country’s top trading partner.
Steelmaker Cia. Siderurgica Nacional SA rose the most in seven weeks, following metals higher. The Standard & Poor’s GSCI index of 24 raw materials jumped to a five-week high. Lender Banco do Brasil SA led an advance in financial shares. Gafisa SA led losses by homebuilders as economists covering Brazil reduced their growth forecasts to less than 3 percent, the lowest among the largest emerging markets.
The Ibovespa gained 1 percent to 55,700.77 at the close of trading in Sao Paulo. The measure has dropped 12 percent from this year’s high on Jan. 3. The real fell 0.2 percent at 2.0388 per U.S. dollar today. The Bloomberg Base Metals 3-Month Price Commodity Index added 1.1 percent.
“Investors have overreacted to the risk of a deeper slowdown in China, and now we’re seeing a rebound for stocks that have suffered the most because of that,” Pedro Galdi, chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a phone interview.
The Shanghai Composite Index added 0.8 percent today as Chinese stocks continued to rally after posting the longest streak of weekly gains in four months amid speculation the government will speed up economic reforms that could shore up growth. The Asian nation’s economic planning agency on May 15 said that investment projects for airports and gas fields won’t need pre-approval any more.
Vale jumped 3.8 percent to 31.05 reais. CSN, as Siderurgica Nacional is also known, gained 2.2 percent to 6.85 reais. The MSCI Brazil/Materials index rose 3 percent in the best performance among 10 industry groups.
Banco do Brasil SA climbed 2.5 percent to 26.57 reais. Utility Cia. de Saneamento Basico do Estado de Sao Paulo gained 3.5 percent to 26.41 reais, the biggest one-day jump since Feb. 4.
The Ibovespa fell as much as 1 percent in intraday trading after economists covering Brazil reduced their growth forecasts to 2.98 percent this year, according to the median forecast in a central bank survey of about 100 analysts published today, down from 3 percent last week. That compares with a projected 3.1 percent expansion in Russia, 5.2 percent for India and 8 percent for China, according to economists surveyed by Bloomberg.
“I don’t see anything that could push equities higher in the short term,” Fabio Cardoso, a partner at Rio de Janeiro-based equity advisory firm Adinvest Consultoria, said in a phone interview. “The outlook for the economy is not good. Growth is slow and trailing many emerging economies.”
Gafisa slumped 2.1 percent to 3.78 reais.
Companies controlled by billionaire Eike Batista were among the worst performers on the benchmark gauge. Oil producer OGX Petroleo & Gas Participacoes SA slumped 2.8 percent to 1.72 reais, retreating a third day. Mining company MMX Mineracao & Metalicos SA dropped 1.5 percent to 1.99 reais.
The Ibovespa has declined 8.6 percent this year, the worst performer after Colombia’s IGBC index among 19 major emerging markets, data compiled by Bloomberg show. Brazil’s benchmark equity index trades at 12.3 times analysts’ earnings estimates for the next four quarters, compared with a multiple of 10.9 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.
Trading volume for stocks in Sao Paulo was 7.22 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.72 billion reais this year through May 16, according to data compiled by the exchange.