- Local assets seen attractive with new government recovery plan
- Prospects for U.S. monetary policy favor riskier assets
The Ibovespa rose to a two-week high on speculation local stocks will attract foreign investors as interest rates in the U.S. remain low for a longer time and Brazil puts in place a plan to restore growth.
State-controlled oil producer Petroleo Brasileiro SA contributed the most to the benchmark equity index’s advance, following gains in crude. Power utility CPFL Energia SA climbed to a two-month high after its controlling shareholder agreed to sell its stake to State Grid Corp of China during President Michel Temer’s trip to the country, Brazil’s top trading partner.
Temer, who officially took over on Aug. 31 after Dilma Rousseff was removed from office, has vowed to jump start the economy and promised to shore up the country’s finances and make Brazil a more attractive destination for investment. Brazilian stocks also got a boost this week as expectations that the U.S. Federal Reserve will raise interest rates faded.
"Brazil is the flavor of the month among emerging nations," Renato Nobile, the chief executive officer at Bullmark Financial Group in Brasilia, which has 1.2 billion reais ($370 million) in assets under management. Nobile says he’s looking for buying opportunities in financial companies, power utilities and consumer stocks.
The Ibovespa climbed 1.3 percent to 59,007.59 at 11:12 a.m. in Sao Paulo, extending a weekly advance to 2.2 percent. All but 12 of the index’s 59 stocks gained Friday. Petrobras, as Petroleo Brasileiro is known, rose 3.7 percent, while CPFL added 1.4 percent.
Pulp producers Fibria Celulose SA and Suzano Papel e Celulose SA, which get most of their revenue from exports, were the worst performers on Ibovespa as the real advanced. The currency rose after weaker-than-expected job data in the U.S. fueled wagers that the Federal Reserve will refrain from increasing interest rates this month.