Ibovespa Rises as Government Victory Offsets Oi Contagion Woesby
Consumer stocks advance after agreement on state debt reached
Oi’s filing for bankruptcy protection hits Brazil’s banks
The Ibovespa rose for the fifth straight day after Acting President Michel Temer scored a political victory, fueling bets the new government can get support for a broader recovery plan and offsetting concern that a record bankruptcy filing will spread to other companies.
Seven of the 10 best performers on Brazil’s benchmark equity index were shares of companies that depend on the domestic economy. They rallied after Temer reached an agreement with state treasuries to alleviate their financial crises. Credit-card processor Cielo SA and retailer Lojas Renner SA’s gains outweighed a slump in banks, which fell after phone carrier Oi SA sought protection from creditors on 65 billion reais ($19.1 billion) in debt.
"The market is happy to see that Temer was successful in reaching a deal regarding a very hard matter," Vitor Suzaki, an analyst at brokerage Lerosa Investimentos, said from Sao Paulo. "That’s a good signal considering that passing the measures to shore up the country’s budget, which is seen as a condition to put Brazil back on the right track, won’t be easy."
The Ibovespa added 1 percent to 50,837.80 as 46 of its 59 members advanced. The index had fallen as much as 1.3 percent earlier as Oi, Banco do Brasil SA and Itau Unibanco Holding SA dropped. Cielo and Lojas Renner both advanced 2.9 percent.