Brazil Bovespa Rises on China Growth, Led by Vale: Latin Stocks
The D word. It is happening right in front of our eyes. History is being made and we are here to watch Mr. TJ!
Brazil Bovespa Rises on China Growth, Led by Vale: Latin Stocks
By Fabio Alves and William Freebairn
Jan. 24 (Bloomberg) -- Brazil's main stock index rose the most in more than five years as China's economic expansion and better- than-expected earnings at U.S. companies allayed concern that slowing global growth would hurt Latin America's economies.
The Bovespa index of most-traded shares on the Sao Paulo exchange surged 3,228.49, or 6 percent, to 57,463.31, the biggest increase since October 2002. Cia. Vale do Rio Doce, the second- heaviest weighted stock, had the biggest gain, as all but three of the 64 stocks on the Bovespa index advanced. Chile's IPSA index rose the most in nine years, jumping 5.8 percent.
``Investors are taking advantage of the positive news from the U.S. and China to buy stocks that are now cheap because of the recent decline,'' said Alexandre Vianna, who manages the equivalent of $280 million of Brazilian stocks at Suladis DTVM in Sao Paulo, a unit of SulAmerica Investimentos. ``There's still no clear direction, as the market is vulnerable to big swings driven by news.''
The Brazilian stock index had fallen 18 percent from high on Dec. 6 through yesterday on concern that losses from the credit meltdown would push the U.S. economy into a recession, curbing global economic growth. Today's gain pared Bovespa's losses, with the index ending the week, abbreviated by a holiday in Sao Paulo tomorrow, little changed, after a 7.2 percent drop last week.
``The economic growth reading in China helped the performance of Brazilian commodities exporters such as Vale do Rio Doce,'' said Fabio da Motta Pinto, who manages the equivalent of about $1.7 billion of stocks at Legg Mason in Brazil.
Growth Continues
China's gross domestic product expanded 11.2 percent in the three months ended Dec. 31, the fourth-straight quarter of growth greater than 11 percent, signaling demand for commodities is likely to remain strong. Xerox Corp., Lockheed Martin Corp. and Union Pacific were among U.S. companies reporting earnings that exceeded analyst expectations.
Vale, the world's biggest iron-ore producer, added 3.09 reais, or 7.6 percent, to 43.70 reais. The company confirmed on Jan. 21 it was in talks to buy Zug, Switzerland-based coal and copper producer Xstrata Plc. Brazil's government is opposed to the acquisition and will ask board members that represent the state to vote against it, Valor Economico reported today, citing an unidentified minister.
Cia. Siderurgica Nacional SA, Brazil's third-largest steelmaker, soared 10 percent to 50.60 reais, the highest in 10 days on the outlook of expansion of its iron-ore production, said Santander Investment analyst Felipe Reis. He projects CSN, as the steelmaker is known, will boost sales of iron-ore to 29.5 million tons this year from an estimated 8.5 million tons in 2007.
Buying Cheap
Mexican stocks rose for a third day as investors bought shares that had fallen the most during a 20 percent decline through earlier this week. Citigroup Inc. analysts upgraded some shares today, calling them cheap.
The Bolsa index of 35 most-traded companies rose 284.80 to 27,905.13, the highest in a week.
``The market is seeing a lot of buying on price, not fundamentals,'' said Carlos A. Gonzalez, an analyst at IXE Grupo Financiero in Mexico City.
Cemex SAB, North America's largest cement maker, led the gains. The company reports fourth-quarter earnings on Monday. Gonzalez said the results will be bolstered by inclusion of Rinker Group Ltd., the Australian building materials company Cemex bought last year.
Santander Investment analysts Gonzalo Fernandez and Vivian Salomon said they expect the company to report that net income rose 27 percent. Cemex shares gained 5.4 percent to 28.38 pesos, the highest in three weeks.
Controladora Comercial Mexicana SA, the operator of supermarkets and Costco stores in Mexico, gained 3.6 percent after Citigroup analyst Eduardo Estrada Lopez upgraded shares today to ``buy'' from ``hold,'' citing a 25 percent decline in price.
Elsewhere in Latin America, the main indexes in Colombia, Argentina, Peru and Venezuela all gained.
The MSCI EM Latin America index rose 6.5 percent, to 3,937.56, the highest since Jan. 16.
To contact the reporters on this story: Fabio Alves in New York at Falves3@bloomberg.net ; William Freebairn in Mexico City at wfreebairn@bloomberg.net |
