The Ibovespa climbed, paring the biggest monthly drop since June, amid speculation that the declines in January were excessive given the prospects for Brazilian corporate earnings.
Itau Unibanco Holding SA, Latin America’s biggest lender by market value, contributed the most to the gauge’s advance. Banco do Brasil SA rose the most since May. Power utility EDP-Energias do Brasil SA rallied as energy prices soared because Brazil’s dry weather is depleting reservoirs used for hydropower.
The Ibovespa added 0.8 percent to 47,638.99 at the close of trading in Sao Paulo, reducing this month’s drop to 7.5 percent. Forty-four of its 72 member stocks rose today. The real weakened 0.1 percent to 2.4128 per dollar.
“The Ibovespa has fallen so much in the past weeks that some stocks have reached a level that attracts buyers looking for bargains,” Fernando Goes, an analyst at the brokerage firm Clear Corretora, said in a phone interview from Sao Paulo. “Brazilian banks such as Itau are a good example. They have always found a way to deliver good results even in times when the country’s economy is not so good.”
Itau added 2.6 percent to 30.28 reais. Bradesco rose 1.7 percent to 26.16 reais. The MSCI Brazil/Financials Index advanced 1.5 percent in the second-best performance among 10 industry groups. Energias do Brasil climbed 4.3 percent to 9.65 reais. Rival AES Tiete SA, which is a Brazilian subsidiary of Arlington, Virginia-based AES Corp., advanced 4 percent to 18.88 reais.
Brazil’s benchmark electricity price reached a record high today as low water reservoir levels prompted the government to increase use of more-expensive thermal plants, according to the website of the energy trading board known as CCEE. The weekly spot price, known as PLD, rose 69 percent to 822.83 reais per megawatt-hour for the southeastern and central regions, the country’s wealthiest and most populated, from 486.59 reais last week.
The Ibovespa fell as much as 0.9 percent earlier today on concern that growth is slowing in China, Brazil’s biggest trading partner. Steelmaker Cia. Siderurgica Nacional dropped 0.5 percent to 11.19 reais. The Standard & Poor’s GSCI index of 24 raw materials sank 0.7 percent.
“There’s a lot of fear that China is slowing down, which is very negative for all emerging markets,” Pedro Galdi, the chief analyst at SLW Corretora in Sao Paulo, said by phone.
China’s manufacturing contracted in January for the first time in six months, HSBC Holdings Plc and Markit Economics Ltd.’s purchasing managers’ index indicated this week.
The Ibovespa has tumbled 16 percent from a bull-market high on Oct. 22 as inflation exceeded policy makers’ target for a third consecutive year and concern mounted that higher government spending will lead to a reduction in the country’s credit rating.
Trading volume of stocks in Sao Paulo was 7.04 billion reais today, data compiled by Bloomberg show. That compares with a daily average of 6.2 billion reais this month through yesterday, according to data from the exchange.