Ibovespa Rises as ECB Rate Pledge Eases Growth Concern
The Ibovespa gained for the first time in five days as European Central Bank President Mario Draghi said interest rates will remain low for an extended period, easing concern that the global recovery will falter.
MPX Energia SA (MPXE3) rallied as founder Eike Batista quit as chairman after Germany’s E.ON SE strengthened its control, agreeing to invest 400 million reais in the energy company. Batista’s oil producer OGX Petroleo e Gas Participacoes SA rose the most on the equity gauge today. Tecnisa SA (TCSA3) rebounded from a five-month low after the homebuilder said sales booked in the second quarter rose 135 percent to 555 million reais.
The Ibovespa rose 1.6 percent to 45,763.16 at the close of trading in Sao Paulo. Fifty-five of the index’s 71 stocks gained. Brazil’s main equity gauge has slumped 15 percent over the past month and 25 percent this year, wiping out $282 billion from the value of Brazilian equities, according to data compiled by Bloomberg.
“The Ibovespa is taking advantage of a more positive day in the global markets, following Draghi’s remarks, to pare some of the huge losses it’s capping this year,” Alvaro Bandeira, a partner at Orama Asset Management, said by phone from Rio de Janeiro.
European stocks advanced as Draghi fleshed out the central bank’s outlook for monetary policy after investors pushed up long-term bond yields, threatening economic growth. U.S. markets were closed for the Independence Day holiday. The real rose 0.9 percent to 2.2486 per dollar after the central bank intervened in the foreign-exchange market.
‘Up to Brazil’
“What you see now is that the world seems to be finally overcoming the effects of the financial crisis of 2008, with improvements especially in the United States and Europe,” Rogerio Freitas, a partner at hedge fund Teorica Investimentos, said by phone from Rio de Janeiro. “Now it’s up to Brazil. This underperformance we’ve seen lately was caused by the lack of confidence that the government’s economic policy will be successful in boosting growth.”
Brazil’s Ibovespa is the second-worst performer this year after Peru’s Lima General index among 94 stock benchmarks tracked by Bloomberg as concern mounts that accelerating inflation will curb the economic recovery and amid speculation that the government’s interventionist policies will hurt profits in industries from utilities to energy.
MPX jumped 10 percent to 7.11 reais. OGX gained 21 percent to 47 centavos. Shipbuilder OSX Brasil SA (OSXB3) fell 8.7 percent to 1.05 reais after earlier rising as much as 10 percent. Batista is considering shutting down OSX and selling production platforms to raise cash, according to a person with direct knowledge of the plan who asked not to be named because the discussion is private. OSX said in an e-mail it has no plans to close the shipyard.
Tecnisa advanced 4 percent to 7.85 reais. Iron-ore producer Vale SA jumped 3.7 percent to 26.97 reais, its biggest one-day advance in three weeks.
Brazil’s benchmark stock measure trades at 11.3 times analysts’ earnings estimates for the next four quarters, compared with 9.8 for the MSCI Emerging Markets Index of 21 developing nations’ equities. Trading volume for stocks in Sao Paulo was 4.66 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.91 billion reais this year through July 2, according to data compiled by the exchange.
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