The Bovespa stock index rose for a third day as homebuilders and banks rallied and investors speculated economic growth is accelerating in China, Brazil’s biggest trade partner.
Vale SA, the world’s largest iron-ore producer, climbed after China’s imports of the mineral rebounded to a five-month high. PDG Realty SA Empreendimentos & Participacoes reached a record, leading a rally in homebuilders after Goldman Sachs Group Inc. recommended adding to holdings of the stock. Banco Santander Brasil SA also rose to the highest level since its initial public offering, leading gains in financial stocks.
The Bovespa gained 1 percent to 71,646.42 at 10:38 a.m. New York time. Forty-six stocks rose on the index while 18 fell. The real strengthened 0.8 percent to 1.6570 per dollar.
“Domestic stocks continue to be very strong,” said Eduardo Roche, who helps manage 3 billion reais ($1.81 billion) at Banco Modal SA in Rio de Janeiro. “Valuations are stretched especially in retail, but banks are showing a lot of room to gain. The China iron-ore numbers reinforce the already favorable outlook for Vale. Vale is cheap; it has a lot of upside.”
Brazil’s benchmark equity gauge rose Oct. 11 on speculation the Federal Reserve will take further measures to stimulate U.S. economic growth, overshadowing higher domestic inflation forecasts. The Fed said in minutes published yesterday, when the Brazilian market was closed for a holiday, that it was prepared to ease monetary policy “before long.”
China’s foreign-exchange reserves increased by a record to $2.65 trillion at the end of September, while a 25 percent jump in exports lifted its trade surplus to $16.9 billion, reinforcing optimism the country will continue to lead the global recovery.
China Rebounds
Iron-ore imports by China, the largest buyer of the steelmaking ingredient, rebounded 18 percent in September, indicating government measures to curb steel production haven’t damped ore demand. Imports rose to 52.6 million metric tons, the highest level since April, from 44.6 million tons in August, according to figures provided by China’s General Administration of Customs. That’s 19 percent lower than the 64.6 million tons a year earlier, data compiled by Bloomberg show.
Brazilian miners, banks, homebuilders and transportation companies will likely eclipse gains for retailers, which have led this year’s advance in Latin America’s largest market, Goldman Sachs said.
Vale SA rose 0.5 percent to 47.65 reais. PDG Realty, the Brazilian homebuilder that agreed to buy Agre Empreendimentos Imobiliarios SA, jumped 5 percent to 22.40 reais and earlier reached 22.49 reais, the highest price since its January 2007 IPO. Banco Santander Brasil, the Brazilian unit of Spain’s biggest bank, advanced 2.1 percent to 25.13 reais, the highest level since its IPO in October last year.
Goldman’s Prediction
“Commodity stocks we think will especially shine, as developed-market central banks provide a continued flow of liquidity,” Goldman strategist Stephen Graham, who is “bearish” on Brazilian steelmakers, wrote in a note to clients today. “Defensive utilities and telcos may not perform in the strong market we expect.”
Goldman expects the Bovespa to rise to a record 78,000 by yearend.
Brazilian bank bond sales are climbing to a record, seven months after the central bank freed lenders to start issuing longer-term local debt. Sales of the notes, which are known as letras financeiras and have a minimum maturity of two years, surged to 5.8 billion reais in September, the busiest month since the debut issue in April, according to Cetip SA - Balcao de Ativos e Derivativos, Brazil’s biggest clearinghouse.
The Bovespa index trades at 10.6 times analysts’ 2011 earnings estimates, compared with 11 times for the MSCI Emerging Markets Index of 21 developing nations’ stocks and 14.3 times for Mexico’s IPC index, according to weekly data compiled by Bloomberg. The Bovespa trades at 15.3 times the reported profits of its companies.
To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net
http://jodnet.blogspot.com
Vale SA, the world’s largest iron-ore producer, climbed after China’s imports of the mineral rebounded to a five-month high. PDG Realty SA Empreendimentos & Participacoes reached a record, leading a rally in homebuilders after Goldman Sachs Group Inc. recommended adding to holdings of the stock. Banco Santander Brasil SA also rose to the highest level since its initial public offering, leading gains in financial stocks.
The Bovespa gained 1 percent to 71,646.42 at 10:38 a.m. New York time. Forty-six stocks rose on the index while 18 fell. The real strengthened 0.8 percent to 1.6570 per dollar.
“Domestic stocks continue to be very strong,” said Eduardo Roche, who helps manage 3 billion reais ($1.81 billion) at Banco Modal SA in Rio de Janeiro. “Valuations are stretched especially in retail, but banks are showing a lot of room to gain. The China iron-ore numbers reinforce the already favorable outlook for Vale. Vale is cheap; it has a lot of upside.”
Brazil’s benchmark equity gauge rose Oct. 11 on speculation the Federal Reserve will take further measures to stimulate U.S. economic growth, overshadowing higher domestic inflation forecasts. The Fed said in minutes published yesterday, when the Brazilian market was closed for a holiday, that it was prepared to ease monetary policy “before long.”
China’s foreign-exchange reserves increased by a record to $2.65 trillion at the end of September, while a 25 percent jump in exports lifted its trade surplus to $16.9 billion, reinforcing optimism the country will continue to lead the global recovery.
China Rebounds
Iron-ore imports by China, the largest buyer of the steelmaking ingredient, rebounded 18 percent in September, indicating government measures to curb steel production haven’t damped ore demand. Imports rose to 52.6 million metric tons, the highest level since April, from 44.6 million tons in August, according to figures provided by China’s General Administration of Customs. That’s 19 percent lower than the 64.6 million tons a year earlier, data compiled by Bloomberg show.
Brazilian miners, banks, homebuilders and transportation companies will likely eclipse gains for retailers, which have led this year’s advance in Latin America’s largest market, Goldman Sachs said.
Vale SA rose 0.5 percent to 47.65 reais. PDG Realty, the Brazilian homebuilder that agreed to buy Agre Empreendimentos Imobiliarios SA, jumped 5 percent to 22.40 reais and earlier reached 22.49 reais, the highest price since its January 2007 IPO. Banco Santander Brasil, the Brazilian unit of Spain’s biggest bank, advanced 2.1 percent to 25.13 reais, the highest level since its IPO in October last year.
Goldman’s Prediction
“Commodity stocks we think will especially shine, as developed-market central banks provide a continued flow of liquidity,” Goldman strategist Stephen Graham, who is “bearish” on Brazilian steelmakers, wrote in a note to clients today. “Defensive utilities and telcos may not perform in the strong market we expect.”
Goldman expects the Bovespa to rise to a record 78,000 by yearend.
Brazilian bank bond sales are climbing to a record, seven months after the central bank freed lenders to start issuing longer-term local debt. Sales of the notes, which are known as letras financeiras and have a minimum maturity of two years, surged to 5.8 billion reais in September, the busiest month since the debut issue in April, according to Cetip SA - Balcao de Ativos e Derivativos, Brazil’s biggest clearinghouse.
The Bovespa index trades at 10.6 times analysts’ 2011 earnings estimates, compared with 11 times for the MSCI Emerging Markets Index of 21 developing nations’ stocks and 14.3 times for Mexico’s IPC index, according to weekly data compiled by Bloomberg. The Bovespa trades at 15.3 times the reported profits of its companies.
To contact the reporter on this story: Alexander Cuadros in Sao Paulo at acuadros@bloomberg.net
http://jodnet.blogspot.com
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