Ibovespa Rises on Prospects for Exports After China Reform Plan

The Ibovespa climbed for a third day on wagers that exports will increase after leaders in China, Brazil’s biggest trading partner, pledged to undertake reforms aimed at shoring up economic growth.

Vale SA, the world’s biggest iron-ore producer, gained as the MSCI Brazil/Materials index posted the biggest advance since Aug. 9. Pulp producer Fibria Celulose SA rallied after announcing a land sale that will allow the company to pay part of its debt. Retailer Marisa Lojas SA fell as profit slumped.

The Ibovespa rose 1.6 percent to 54,307.04 at the close of trading in Sao Paulo, extending a three-day gain to 4.8 percent. Fifty-nine of its 72 stocks climbed. The Brazilian real strengthened 2.2 percent to 2.2639 per dollar, the biggest gain in two months.

China pledged to allow more private investment in state-controlled industries, according to a Communist Party decision published by the official Xinhua News Agency on Nov. 15. President Xi Jinping’s reforms are aimed at giving more influence to market forces and loosening government controls.

“It’s good news for the Brazilian market to know that China is working to sustain a high rate of growth in the coming years,” Eduardo Velho, the chief economist at INVX Global Partners in Sao Paulo, said in a phone interview. “That means good prospects for Brazilian exports.”

Vale gained 2.1 percent to 33.07 reais. The materials index climbed 3.5 percent.

Petroleo Brasileiro SA, Brazil’s state-run oil company, jumped 4.8 percent to 21.44 reais, contributing most to the Ibovespa’s advance.

Fibria’s Rally

Fibria added 1.3 percent to 29.45 reais. Chief Financial Officer Guilherme Cavalcanti said that the pulp producer will use the 1.65 billion reais ($720 million) it will get from Parkia Participacoes SA for the sale of 210,000 hectares in land to trim its debt and reduce financing costs.

Investors are betting that after this improvement Fibria’s credit ratings will increase to investment grade, according to Pedro Galdi, the chief analyst at Sao Paulo-based brokerage SLW. “The company is making all efforts to clean house,” Galdi said.

The company’s credit ratings at Standard and Poor’s, Moody’s Investors Service and Fitch Ratings Ltd are one level below investment grade, according to data posted on the producer’s website.

Marisa declined 2 percent to 18.38 reais. Adjusted net income fell 81 percent to 12.3 million reais in the three months through Sept., according to data compiled by Bloomberg after the retailer released quarterly results on Nov. 14. That compares with an average estimate of a profit of 50.7 million reais among four analysts surveyed by Bloomberg.

Ibovespa in 2013

Brazil’s main equity index 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 20 percent this year in dollar terms, compared with a decline of 2.7 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo was 7.07 billion reais today, according to data compiled by Bloomberg. That compares with a daily average of 7.55 billion reais this year through Nov. 14, according to data compiled by the exchange.

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