Ibovespa Posts Biggest Weekly Gain in Month as OGX Climbs

The Ibovespa posted its biggest weekly gain in a month, with OGX Petroleo e Gas Participacoes SA having the best week on record, as banks climbed on speculation higher interest rates will bolster profits.

OGX Petroleo e Gas Participacoes SA, the oil company controlled by former billionaire Eike Batista, jumped 95 percent this week amid talks with bondholders and potential investors. Brookfield Incorporacoes SA led homebuilders lower today on speculation the central bank will raise its target lending rate to 10 percent next month. The MSCI Brazil/Financials index climbed to the highest since May as Itau Unibanco Holding SA rallied a fifth day on speculation higher interest rates will boost profits.

The Ibovespa rose less than 0.1 percent to 55,378.46 at the close of trading in Sao Paulo, pushing this week’s advance to 4.2 percent, the biggest gain since the five days ended Sept. 6. Swap rates climbed after consumer prices as measured by the IPCA-15 index rose 0.48 percent from Sept. 13 to Oct. 11, higher than every forecast from 33 economists surveyed by Bloomberg.

“This week had an important ’OGX effect,’ with the stock surging,” Felipe Rocha, an analyst at the brokerage firm Omar Camargo, said by phone from Curitiba, Brazil. Inflation data corroborated the idea that the central bank will keep raising interest rates to keep a lid on prices, he said.

In minutes of the Oct. 8-9 central bank meeting published yesterday, policy makers said they will remain vigilant in working to curb inflation amid wage increases.

OGX Surge

Brookfield sank 6 percent to 1.58 reais. Rossi Residencial SA slumped 4 percent to 3.10 reais.

Itau gained 2.5 percent to 33.92 reais. Banco Bradesco SA, which is scheduled to release third-quarter earnings on Oct. 21, rose 0.9 percent to 33.07 reais.

“With the central bank increasing rates, and if that increase doesn’t compromise growth, that’s a very good scenario for banks,” Rocha said.

OGX, the third-heaviest weighted stock on the Ibovespa, gained 2.5 percent today to 41 centavos. The company said that while it’s in talks with investors, including private equity firm Vinci Partners Investimentos Ltda, no deal has been reached yet about a capital injection or a stake sale, according to regulatory filing.

Vinci denied it’s negotiating an investment in OGX in an e-mailed statement today.

Bull Market

Petrochemicals producer Braskem SA added 2.6 percent to 19.89 reais. HSBC Holdings Plc raised its recommendation to the equivalent of buy.

BHG SA-Brazil Hospitality Group, a hotel operator, rose 4.4 percent to 15.30 reais after it agreed to buy Hotel Marina Palace in Rio de Janeiro. The acquisition will help BHG to profit from the World Cup and the 2016 Summer Olympics in the city, Banco Espirito Santo de Investimento SA analysts including Eduardo Silveira wrote in a research note today.

The Ibovespa entered a bull market Sept. 9 after rising 20 percent from this year’s low on July 3 through that day. The gauge is still down 14 percent in dollar terms this year, compared with a decline of 1.4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo today was 7.13 billion reais, according to data compiled by Bloomberg. That compares with a daily average of 7.61 billion reais this year through Oct. 16, according to data compiled by the exchange.

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