Ibovespa Climbs as Usiminas Leads Brazilian Steelmakers Higher

The Ibovespa rose for the first time in four days amid speculation the drop that pushed the Brazilian benchmark’s valuation to a one-month low was excessive.

Usinas Siderurgicas de Minas Gerais SA climbed to the highest since March 2012, leading steelmaker gains after Goldman Sachs Group Inc. said the chance of steel price increases in Brazil early next year has risen. Developer BR Properties SA sank as central bank policy makers said in minutes of their last meeting that they must remain vigilant on inflation, rekindling speculation that they will sustain the pace of interest-rate increases.

The Ibovespa rose 1.1 percent to 50,787.63 at the close of trading in Sao Paulo. After a 4.3 percent slump in the previous three sessions, stocks on the Brazilian index yesterday traded at an average of 0.98 times their book value, the lowest ratio since Oct. 31, according to data compiled by Bloomberg.

“After the big losses we’ve seen in the past few days, it’s normal to have a correction,” Fernando Goes, an analyst at Clear Corretora in Sao Paulo, said by phone. “It doesn’t mean that the market is improving, but after a sudden drop there’s always people trying to make some short-term profit.”

Fifty stocks on the Ibovespa advanced today, while 21 dropped. The real climbed 1.5 percent to 2.3552 per U.S. dollar at 5:26 p.m. local time.

Usiminas, Gerdau

Usiminas, as Usinas de Minas Gerais is known, rose 7.5 percent to 13.42 reais. The company will probably benefit the most from an increase in steel prices in Brazil because of its higher exposure to the domestic market, Goldman Sachs analysts including Marcelo Aguiar wrote in a research note.

“Steel stocks will outperform if a further steel price hike materializes in the short term as we believe investors are still skeptical on higher prices in the next 12 months,” the analysts wrote.

Steelmaker Gerdau SA added 3.1 percent to 18.36 reais, while competitor Cia. Siderurgica Nacional SA gained 3.8 percent to 12.50 reais.

BR Properties fell 1.5 percent to 18.14 reais. While citing the delayed effect of changes in borrowing costs on inflation, the central bank’s board said in minutes of their meeting last month that the current pace remains appropriate. Policy makers voted unanimously to raise the target lending rate on Nov. 27 by a half-percentage point for a fifth straight meeting, setting it at 10 percent.

Exchange operator BM&FBovespa SA lost 4.6 percent to 10.66 reais after saying Brazil’s Finance Ministry denied an appeal on a 410.2 million-real tax dispute.

Brazil’s benchmark 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 28 percent in dollar terms this year, compared with a decline of 5.4 percent for the MSCI Emerging Markets Index of 21 developing nations’ equities.

Trading volume of stocks in Sao Paulo today was 6.9 billion reais, data compiled by Bloomberg show. That compares with a daily average of 7.51 billion reais this year through yesterday, according to data available from the exchange.

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