The Ibovespa rose to a five-month high after a poll showed Brazilian President Dilma Rousseff’s lead against potential candidates in the October presidential election would be too narrow to call a first-round victory.
State-controlled power utility Centrais Eletricas Brasileiras SA climbed for the first time in three days. Homebuilder Rossi Residencial SA led a decline among companies that rely on domestic demand after economists cut their forecasts for Brazil’s growth. Iron-ore mining company Vale SA fell as manufacturing in China, the Latin American country’s biggest trading parter, contracted in April for a fourth straight month.
The Ibovespa added 0.9 percent to 53,446.17 at the close of trading in Sao Paulo, its highest level since Nov. 18. Forty-three stocks on the gauge rose while 25 fell. The real lost 1.1 percent to 2.2468 per U.S. dollar at 5:25 p.m. local time.
“State-owned companies are rising on bets on a change in government,” Andre Perfeito, the chief economist at brokerage firm Gradual Investimentos, said in a phone interview from Sao Paulo. “It’s natural that support for other candidates begins to increase when voters get to know them better, but it’s still too soon to forecast if Rousseff will be re-elected or not.”
Rousseff would win 35 percent of the vote in a Sensus poll that pitted her against Aecio Neves and Eduardo Campos, who would garner 23.7 percent and 11 percent for a combined 34.7 percent, according to a survey by IstoE magazine published May 3. The April 22-25 survey of 2,000 has a margin of error of plus or minus 2.2 percentage points. A candidate needs to have more than 50 percent of the valid votes to avoid a runoff.
Rousseff’s re-election campaign recognizes she probably won’t win in the first round, according to a government official with knowledge of the matter who can’t be named because the evaluation isn’t public.
Voting shares of Eletrobras, as Centrais Eletricas is known, advanced 2.3 percent to 7.72 reais.
Rossi dropped 4.6 percent to 1.65 reais as economists in a central bank survey cut their 2014 and 2015 median growth forecasts to 1.63 percent and 1.91 percent.
The Ibovespa declined as much as 0.1 percent earlier today as commodity shares retreated. Vale, which ships half of its ore and pellets to China, fell 0.7 percent to 27.15 reais.
China’s purchasing managers’ index was at 48.1 last month, HSBC Holdings Plc and Markit Economics said in a statement, with numbers below 50 indicating contraction.
“Signs of deceleration in China always have a negative impact on Vale,” Sandro Fernandes, a trader at brokerage firm Geraldo Correa, said in a phone interview from Belo Horizonte, Brazil. “The Asian country is one of Vale’s biggest clients, and if it reduces its acquisitions of iron ore, the company’s revenue should fall.”
The Ibovespa has increased 19 percent since this year’s low on March 14 as state-owned companies including Eletrobras rebounded on speculation that Rousseff may lose the election and a new president could reduce the intervention in companies that the federal government controls.
Trading volume of stocks in Sao Paulo was 6.69 billion reais today, according to data compiled by Bloomberg. That compared with a daily average of 6.75 billion reais this year, according to data from the exchange.