Cemig Rallies as Bradesco Raises Stock to a Buy: Sao Paulo Mover
Cia. Energetica de Minas Gerais, Brazil’s biggest electric utility, rose the most in four years as Banco Bradesco SA (BBDC4) recommended investors buy the stock after executives resisted government-mandated price cuts.
Shares of the Belo Horizonte-based company known as Cemig jumped 6.1 percent to 25.15 reais at the close of trading in Sao Paulo, the highest since Sept. 19. President Dilma Rousseff on Sept. 11 announced a plan to cut power costs to aid households and manufacturers. It was the second-biggest gainer on the country’s benchmark Bovespa index, which fell 0.4 percent.
Cemig Chief Executive Officer Djalma Morais said Dec. 4 he wouldn’t renew contracts with the federal government to operate 18 hydroelectric plants because the terms were unfavorable. As a condition of the renewal, the utility to would have to cut rates for its customers, according to Rousseff’s plan.
“The company showed commitment to its shareholders by not renewing the generation concessions,” Vladimir Pinto and Marcelo Sa, analysts at Bradesco’s brokerage unit, wrote in a note to clients published today.
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