Brazil's Stocks Rise on Finance Ministry Replacement Speculationby
Former central bank head Meirelles may take Levy's position
Lender Itau contributed the most to the equity gauge's gain
Brazilian stocks rose amid speculation that former central bank head Henrique Meirelles may replace Finance Minister Joaquim Levy, fueling optimism he could rally the political support needed to pass austerity measures aimed at shoring up the budget.
Newspaper Valor Economico reported that Meirelles and politicians are already discussing possible measures to trim the country’s deficit and restore growth. Former President Luiz Inacio Lula da Silva is among Levy’s critics and has thrown his weight behind Meirelles, who was the top monetary-policy official under his government, to lead Brazil’s economic rebound, O Estado de S. Paulo newspaper reported Wednesday.
Levy has faced strong opposition from lawmakers, including those from President Dilma Rousseff’s Workers Party, as he tries to cut costs and increase taxes to avert another credit-rating downgrade after Standard & Poor’s cut the country to junk in September. Meirelles is seen as a market-friendly replacement who could would have better support in Congress, said Lenon Borges, an analyst at the brokerage Ativa Investimentos.
"Both Levy and Meirelles are very good professionals, but Lula’s support makes all the difference now to take the country out of the paralysis it’s in," he said from Rio de Janeiro. "We’ve heard rumors of the replacement many times during this year, but now it’s even stronger because of the news that Meirelles has met with politicians already."
The Ibovespa gained 1.9 percent to 47,105.23 at 10:54 a.m. in Sao Paulo as 58 of its 63 stocks climbed. Itau Unibanco Holding SA gained 2.8 percent, while state-controlled Centrais Eletricas Brasilieiras SA led a rally among power utilities after the Lower House passed a bill establishing rules to bid on hydroelectric dams.