Ibovespa Extended Weekly Rally as Meirelles Sees Growth in 2017

Updated on
  • Kroton Educacional rallied after Estacio accepted takeover bid
  • JBS tumbled as Brazil police searched headquarters amid probe

The Ibovespa extended its third weekly gain, the best winning steak since March, after Brazil Finance Minister Henrique Meirelles said in a radio interview that he’s certain Latin America’s largest economy will grow next year.

The benchmark stock gauge climbed 4.3 percent this week, rallying along with other emerging markets on speculation that global central banks will act to limit the fallout from the U.K.’s vote to leave the European Union. Kroton Educacional SA rallied to the highest since January 2015 after Estacio Participacoes SA said it accepted an all-stock takeover proposal, ending a bidding war over the Brazilian for-profit education company. JBS SA, the world’s biggest producer of beef and chicken, tumbled as Brazilian police searched its offices as part of a corruption probe.

Brazilian equities have led gains among the biggest markets this year amid bets that Acting President Michel Temer will be able to pull the economy out of its worst recession in a century. Meirelles said in an interview with Radio Estadao that if economic measures are approved quickly in Congress, the nation will quickly return to growth.

“Meirelles’s remarks have shown a high degree of transparency, and the market likes that,” said Raphael Figueredo, an analyst at brokerage Clear Corretora in Sao Paulo. “In addition to that, prospects for global liquidity will favor emerging markets.”

The Ibovespa rose 1.4 percent to 52,233.04 on Friday, leaving it trading at 12 times estimated earnings, almost in line with the average valuation for developing economies, according to data compiled by Bloomberg.

Kroton rose 5 percent, while Estacio jumped to the highest level since October. JBS sank 5 percent.

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