The Ibovespa rose to its highest level in eight weeks as faster-than-forecast industrial growth in China boosted prospects for Brazil’s exporters.
Vale SA, the largest iron-ore producer in the world, contributed the most to the benchmark index’s advance. Steelmaker Gerdau SA rallied to a three-month high. Cia. Energetica de Minas Gerais, Brazil’s second-biggest power utility, dropped after saying it will pay 1.4 billion reais for a stake in Renova Energia SA.
The Ibovespa climbed 1.9 percent to 49,874.90 at the close of trading in Sao Paulo, the highest since June 13. The real appreciated 0.6 percent to 2.2702 per dollar at 5:28 p.m. local time. The Bloomberg Base Metals 3-Month Price Commodity Index rose 1.5 percent. China, Brazil’s top trading partner, reported industrial production increased 9.7 percent in July from a year earlier, beating the 8.9 percent median forecast of economists surveyed by Bloomberg.
“The outlook for global growth, especially for emerging markets, is improving,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said in a telephone interview from Rio de Janeiro. “The China fears had been scaring investors off emerging economies, and we’re seeing some of that fear begin to fade.”
The Ibovespa surged 3.1 percent yesterday, leading gains among 94 major equity benchmarks tracked by Bloomberg, after data showed imports increased more than forecast in China. The gauge rose 2.9 percent this week.
Vale increased 3.2 percent to 30.90 reais today. Gerdau rose 1.4 percent to 15.50 reais. A gauge of materials companies led advances among 10 industry groups.
Cemig, as Cia. Energetica is also known, dropped 0.6 percent to 20.47 reais. The utility is paying a “large premium” for the Renova stake, Citigroup Inc. analysts Marcelo Britto and Kaique Vasconcellos wrote in a research note to clients.
“Cemig will likely buy shares of Renova at a large premium to market value, which we see as unjustified,” they wrote. Renova jumped 5.2 percent to 42.46 reais.
Multiplus SA, the frequent-flier unit of Latam Airlines Group SA’s Brazilian subsidiary, rebounded from its worst two-day drop on record after reporting earnings that beat analysts’ estimates. The shares surged 7.1 percent to 25 reais.
BM&FBovespa SA, the operator of the Brazilian exchange, slumped 3.4 percent to 11.69 reais, the worst performer on the benchmark gauge. The company said it expects a drop in trading volume after a record second quarter.
The Ibovespa slumped 20 percent this year through yesterday, wiping out $234 billion from the value of Brazilian stocks, according to data compiled by Bloomberg. The equity gauge trades at 12.7 times analysts’ earnings estimates for the next four quarters, compared with 10.4 for the MSCI Emerging Markets Index of 21 developing nations’ equities.
Trading volume of stocks in Sao Paulo was 8.15 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.58 billion reais this year through Aug. 6, according to data compiled by the exchange.