Bovespa Rises as Interest-Rate Outlook Lifts Hypermarcas

The Bovespa index rose for a second day as consumer stocks rallied on speculation that policy makers will limit interest-rate increases this year after their first move was smaller than some analysts had forecast.

Homebuilder MRV Engenharia e Participacoes SA rose after reporting revenue that climbed 34 percent in the three months ending in March. Competitors Brookfield Incorporacoes SA and Cyrela Brazil Realty SA Empreendimentos e Participacoes also advanced. Consumer goods maker Hypermarcas SA rose the most since January, leading gains on the MSCI Brazil/Consumer Staples Index.

The Bovespa added 1.4 percent to 53,928.92 at the close of trading in Sao Paulo, paring this week’s slump to 1.9 percent. Forty-nine of the measure’s 69 stocks gained today. The real strengthened 0.4 percent to 2.0111 per dollar. Central bankers raised the benchmark rate 0.25 percentage point to 7.5 percent on April 17, smaller than the half-point increase some predicted.

It “looks like now the market is expecting the central bank will increase rates in small dosages, which is giving some momentum to the Bovespa,” Hamilton Moreira, a strategist at Banco do Brasil SA, said by phone from Sao Paulo.

The central bank’s board this week voted 6 to 2 to raise the target lending rate from a record low 7.25 percent. A survey by Bloomberg showed that 18 of 58 analysts forecast an increase of 50 basis points. The statement accompanying policy makers’ decision to raise the benchmark interest rate 25 basis points this week noted that “external uncertainties” required “that monetary policy be managed with caution.”

Cyrela, Brookfield

“It is clear that the central bank will deliver as few rate hikes as possible,” Siobhan Morden, the head of Latin America fixed-income strategy at Jefferies Group Inc., wrote in a report today.

Cyrela rose 2.2 percent to 17.72 reais. Brookfield climbed 2.4 percent to 2.16 reais. Hypermarcas advanced 4.5 percent to 16.15 reais.

MRV jumped 4.8 percent to 8.96 reais. The company reported sales of 1.1 billion reais in the first quarter, according to a regulatory filing with preliminary results yesterday.

Sugar-cane processor Biosev SA, a Louis Dreyfus Holding BV unit in Brazil, fell 14 percent to 12.85 reais in its first day of trading after selling shares for 15 reais each in an initial public offering on April 15.

Miner MMX Mineracao & Metalicos SA led an advance in companies owned by the Brazilian billionaire Eike Batista. The shares jumped 9.2 percent to 2.01 reais, a one-week high.

Relative Value

The Bovespa has retreated 15 percent from this year’s high on Jan. 3 amid concern accelerating inflation may curb Brazil’s economic recovery while the government’s interventionist policies hurt profits in industries including utilities and energy. The MSCI BRIC Index of shares in Brazil, Russia, India and China has lost 8.8 percent over the same period.

Brazil’s benchmark equity gauge trades at 11.1 times analysts’ earnings estimates for the next four quarters, compared with 10.4 for the MSCI Emerging Markets Index of 21 developing nations’ equities, data compiled by Bloomberg show.

Trading volume for stocks in Sao Paulo was 6.25 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.69 billion reais this year through April 17, according to data compiled by the exchange.

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