Ibovespa Posts Best Back-to-Back Gain Since April on Valuations

  • Equity gauge trades near cheapest level since February
  • Itau, Ambev and Petrobras lead advances in Brazilian stocks

The Ibovespa posted the biggest two-day rally in almost four months after valuations near the lowest levels since January lured bargain hunters.

Brazil Stock Valuation Near Lowest Level Since January
Brazil Stock Valuation Near Lowest Level Since January

The stock benchmark stock joined gains in global equities, which rebounded from the worst rout in almost four years. Even with the advance, Brazilian shares are still trading at 10.8 times estimated earnings, or 10 percent below the average of the past 12 months, according to data compiled by Bloomberg. Lender Itau Unibanco Holding SA, the biggest in Latin America by market value, contributed the most to the gauge’s advance.

“Investors are taking advantage of the existing opportunities after the huge selloff,” Ignacio Crespo, an analyst at brokerage Guide Investimentos, said from Sao Paulo. “However, the scenario is still very uncertain both here and abroad, demanding caution.”

Brazilian equities entered a bear market on Friday, after tumbling more than 20 percent from their peak in May, as President Dilma Rousseff struggles to revive an anemic economy amid a sweeping graft scandal engulfing the state-run oil producer and interest rates at a nine-year high. The slide deepened earlier this week on speculation that China, the South American nation’s top trading partner, would slow further.

The Ibovespa rose 3.4 percent to 46,038.08 at the close of trading in Sao Paulo, extending a two-day advance to 3.8 percent. The real gained 0.4 percent to 3.6027 per dollar.

Financial stocks contributed the most to the gauge’s advance as bank lending rose 9.9 percent in July from one year earlier, according to central bank data released Wednesday.

Planemaker Embraer SA, which gets most of its revenue from exports, rallied the most in three weeks after the real depreciated as much as 1.1 percent earlier today, boosting profit prospects. Pulp producer Fibria Celulose SA extended a two-day advance.

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