The Ibovespa equity benchmark rose to a two-week high as Centrais Eletricas Brasileiras SA led gains by Brazilian electrical utilities amid speculation that recent losses may have been excessive.
Water company Cia. de Saneamento Basico do Estado de Sao Paulo also rose as the MSCI Brazil/Utilities Index jumped the most among 10 industry groups. Planemaker Embraer SA rallied after saying it received an order for jets that may be worth as much as $8.3 billion.
The Ibovespa gained 1 percent to 56,265.32 at the close of trading in Sao Paulo, the highest since May 7. Fifty-three stocks advanced on the index while 17 retreated. The real depreciated 0.1 percent to 2.0404 per dollar. Eletrobras gained 7 percent to 10.09 reais, paring the slump in the past 12 months to 45 percent.
“There are signs that the worst is over for utilities,” Marc Sauerman, who helps oversee 650 million reais at Curitiba, Brazil-based J. Malucelli Investimentos, said in a telephone interview. “Obviously, we can’t say they’re going into a bull market, but I think in the past few weeks investors started to regain interest in this sector.”
The Bovespa Electric Energy Index of 16 power companies has tumbled 15 percent in the past 12 months as the Brazilian government ordered utilities applying for license renewals to reduce rates.
Sabesp, as Cia. de Saneamento de Sao Paulo is also known, advanced 3.4 percent to 27.30 reais.
Oil company HRT Participacoes em Petroleo SA plunged 13 percent to a record low 2.85 reais after saying in a regulatory filing that a well drilled in Brazil’s Solimoes basin is dry and another in Namibia has no commercial volume of crude.
The Ibovespa has declined 7.7 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 12.5 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 6.87 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.71 billion reais this year through May 17, according to data compiled by the exchange.