The Ibovespa rose the most in six months as state-run companies including Centrais Eletricas Brasileiras SA rallied as a poll showed President Dilma Rousseff’s approval rating fell before October elections.
State-controlled oil producer Petroleo Brasileiro SA contributed the most to the gauge’s advance while Banco do Brasil SA had the biggest one-day gain since July 2012. Meatpacker Marfrig Global Foods SA climbed after saying plans to take its two foreign subsidiaries public would cut debt ratios by a third and accelerate expansion. Drugstore chain Brasil Pharma SA fell to a record after reporting a surprise loss and saying it breached covenants on local bonds.
The Ibovespa advanced 3.5 percent to 49,646.79 at the close of trading in Sao Paulo, the biggest one-day gain since Sept. 2. The real appreciated 1.8 percent to 2.2627 per dollar at 5:24 p.m. local time, the biggest gain among 24 emerging-market currencies tracked by Bloomberg. Rousseff’s approval rating dropped for the first time since protests pushed her popularity to a record low in July.
“The market hates this government, and there’s very little hope Rousseff loses, so any news that’s bad for her is good for the market,” Luiz Carvalho, a managing partner at New York-based hedge fund Tree Capital, said in a phone interview. “This drop in the approval rating increases the probability that the opposition wins, which would be very positive for the market.”
Voting shares of Eletrobras, as Centrais Eletricas Brasileiras is also known, rose 9.8 percent to 6.36 reais, the best performer on the Ibovespa. Petrobras, as the oil producer is known, gained 8.1 percent to 15.57 reais, the biggest one-day jump in a year. Banco do Brasil climbed 6.6 percent to 22.51 reais.
Rousseff’s press office declined to comment on the market’s performance when contacted by Bloomberg News.
Approval of Rousseff’s way of governing fell to 51 percent in March from 56 percent in December, an Ibope poll published by the National Industry Confederation showed today. Her government’s approval rating slipped to 36 percent from 43 percent over the same period, according to the survey polling 2,002 Brazilians March 14-17 with a margin of error of 2 percentage points.
Rousseff is forecast to garner 43 percent of votes and win October’s presidential election, according to the results of an Ibope opinion poll last week.
Marfrig climbed 3.5 percent to 4.13 reais. The meatpacker, which supplies McDonald’s and Burger King restaurants, estimates it would reduce net debt to 2.7 times earnings before interest, taxes, depreciation and amortization by the end of 2015 by selling 25 percent to 30 percent stakes in U.S. unit Keystone Foods Ltd. and Ireland’s Moy Park Ltd., Chief Executive Officer Sergio Rial said.
Brasil Pharma fell 11 percent to 3.89 reais in the worst performance on the BM&FBovespa Small Cap Index. It posted an adjusted net loss of 368 million reais, while analysts surveyed by Bloomberg had predicted adjusted net income of 19.5 million reais. The pharmacy chain also said in its earnings statement it breached covenants on 549.8 million reais in local bonds.
Brazil’s benchmark equity gauge entered a bear market March 14 after falling 20 percent from its October high through that day. The gauge has since pared the drop to 12 percent. Trading volume of stocks in Sao Paulo was 10.44 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 6.37 billion reais this year, according to data from the exchange.