Jan. 3 (Bloomberg) -- The Ibovespa rebounded from a two-week low, paring a weekly drop as Oi SA rallied on speculation that the phone company may buy some assets from Tim Participacoes SA.
The MSCI Brazil/Telecommunication Services Index was the best performer among 10 industry groups after newspaper Il Sole 24 Ore reported that Tim’s controlling shareholders plan to split the carrier and sell it to local competitors including Oi. JHSF Participacoes SA rallied after the real estate developer was granted a license to build an airport in Sao Paulo state. Iron-ore producer Vale SA sank amid concern that growth is slowing in China, Brazil’s top trading partner.
The Ibovespa climbed 1.3 percent to 50,981.09 at the close of trading in Sao Paulo, with 45 stocks higher and 26 lower. The stock benchmark fell 0.6 percent this week. The real appreciated 0.5 percent to 2.3765 per U.S. dollar at 6:14 p.m. local time.
“If Oi gets a piece of Tim, we’d have a much bigger company, with significant gains of scale,” Pedro Galdi, the head strategist at brokerage firm SLW Corretora in Sao Paulo, said in a phone interview. Oi is Brazil’s fourth-biggest wireless carrier by market share, according to data released yesterday by industry regulator Anatel.
Tim’s controlling shareholders led by Madrid-based Telefonica SA are almost ready with a plan to divide and sell some assets, Il Sole 24 Ore reported today, without saying where it got the information. The Spanish company operates locally under the Vivo brand, and splitting up Tim would help address regulators’ concerns that it controls too much of the Brazilian telecommunications market.
Telecom Italia said in statement that it’s not aware of any offers for its Brazilian unit. Telefonica declined to comment.
Oi rallied 17 percent to 4.11 reais. Tim jumped 11 percent to 13.42 reais. Telefonica Brasil SA, Telefonica’s publicly traded company in Brazil, added 2.5 percent to 45.32 reais.
MRV Engenharia & Participacoes SA climbed 7.6 percent to 8.46 reais, pacing gains among homebuilders, after traders cut bets for higher borrowing costs in Brazil. Today’s gain in the real eased concern that a weaker currency will fuel inflation, Luciano Rostagno, the chief strategist at Banco Mizuho do Brasil, said in a phone interview from Sao Paulo.
JHSF surged 13 percent to 4.55 reais.
The Ibovespa earlier fell as much as 0.1 percent as commodity producers dropped. The Bloomberg Base Metals 3-Month Price Commodity Index declined 1.3 percent after a services gauge from China’s statistics bureau and logistics federation dropped to 54.6 in December from 56 in November.
Vale lost 1.6 percent to 31.42 reais. Steelmaker Gerdau SA dropped 0.7 percent to 18.11 reais.
Trading volume on the Ibovespa was 1.4 times the average of the past 30 days, and there was a surge in transactions in the final minutes of the session before the exchange rebalances the index on Jan. 6 using a new method to determine the relative importance of individual stocks.
“The closing call moved a lot of stocks as investors rebalanced,” Rogerio Freitas, a partner at Teorica Investimentos, said by phone from Rio de Janeiro. “It was adjustments for the index’s new composition.”
The new Ibovespa methodology will determine member weightings by their free-float market value adjusted for liquidity, a shift from the previous approach that relied more on trading volume.
The Ibovespa declined 27 percent in dollar terms in 2013, the worst performance among the 20 biggest equity indexes tracked by Bloomberg, as policy makers boosted borrowing costs to curb inflation that exceeded the government’s target for a third consecutive year.
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