Brazilian Stocks Rise From 6-Year Low as Valuations Lure Buyers

  • Ibovespa index fell on Monday after China manufacturing data
  • China intervened to support its stock market following plunge

Sandler O'Neill's Albertson on Brazil Outlook

Brazil stocks rose for the first time in almost two weeks as valuations tumbled after the Ibovespa hit a six-year low on Monday.

The benchmark index tumbled in the first full trading day of the new year after posting its third straight annual decline in 2015. That sent average stock prices to 12.8 times their estimated 12-month earnings, below the average ratio of 16.6 for the MSCI Emerging Market Index’s 838 members, data compiled by Bloomberg show.

Stocks are also rebounding from a global selloff on Monday triggered by a disappointing manufacturing report from China, Brazil’s biggest trading partner. Surging volatility in Brazilian markets, from the real to stocks and bonds, tends to magnify global swings, said Raphael Figueredo, an analyst at brokerage Clear Corretora.

“Today’s rise is a correction from yesterday’s plunge,” he said by telephone. “Whenever there’s a drop, there’s room to race for bargains.”

China on Tuesday moved to support its stock market with state-controlled funds buying equities and regulators signaling a selling ban on major investors will remain beyond this week’s expiration date, according to people familiar with the matter.

The Ibovespa rose 0.7 percent to 42,419.32 at the close of trading in Sao Paulo as 35 of the gauge’s 61 stocks advanced. The index had lost 4.3 percent in the previous four sessions, touching its lowest since April 2009 on Monday.

Retailer Lojas Renner SA climbed 7.1 percent, and BB Seguridade Participacoes SA rose 6.4 percent, the biggest gains on the index.

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