Brazil's Bovespa Gains, Led by Itausa, Banks on Goldman Rating
How big is your smile there?
By Alexander Ragir and William Freebairn
Feb. 11 (Bloomberg) -- Brazil's Bovespa gained the most in a week, led by banks, after Goldman Sachs Group said financial shares are ``attractive'' following this year's price declines and will benefit from ``strong'' loan growth.
Gerdau SA, Brazil's largest steelmaker, rose the most since January 2004 and its parent company, Metalurgica Gerdau SA, rose the most this decade. Gerdau may report on Feb. 13 that net sales rose 27 percent in the fourth quarter from a year earlier, boosted by its purchase of Midlothian, Texas-based Chaparral Steel, Rodrigo Ferraz, analyst at Banco Brascan SA, said in a note to clients.
Banco Bradesco SA and Itausa Investimentos Itau SA led the biggest gain in the MSCI Brazil Financial Index in more than two weeks. The index has fallen 26 percent since its Oct. 31 high as defaults from sub-prime mortgages hurt financial company profits in U.S. and Europe. Finance Minister Guido Mantega said today that Brazil is unaffected by turmoil in international markets and expects the country to obtain an investment grade rating this year.
``They unjustly suffered and now they're readjusting a bit,'' Fabio Cardoso, whose Maxima Participacoes FI em Acoes fund was the best performer among Brazil-based equity and hedge funds last year, said of the country's banks. ``They've been dropping without a reason.''
The Bovespa index of most-traded shares on the Sao Paulo exchange gained 1,567.24, or 2.7 percent, to 60,643.22. Mexico's Bolsa index rose 2.1 percent, the biggest gain in a week, to 28,789.55.
Brazil's current inflation level is ``comfortable'' and remains ``totally'' in line to meet the central bank's target, Mantega told reporters in Brasilia.
Brazilian Banks
The MSCI Brazil/Financials Index rose for its first time in five days, gaining 3.2 percent to 702.51.
``The structural growth story for Brazilian banks continues,'' Sao Paulo-based analysts Jason B. Mollin and Carlos Macedo wrote in a Goldman report to investors dated today. ``The financial sector deepens as Brazil's investment grade status appears on the horizon.''
Banco Itau Holding Financeira SA, the largest non-state bank, gained the most in more than two weeks, rising 2.4 percent to 37.32. Itausa gained 35 centavos, or 3.8 percent, to 9.60 reais. Banco Nossa Caixa SA, the bank owned by the government of Sao Paulo state, gained 4.9 percent to 23.90 reais. Bradesco, Brazil's second-largest non-state bank, advanced 1.79 reais, or 4.1 percent, to 46 reais.
Bradesco and Itausa Investimentos Itau SA, the controlling holding company of Itau, were rated ``buy'' at Goldman.
Price Target
Gerdau added 3.68 reais, or 8.1 percent, to 48.90 reais. Gerdau Metalurgica gained 5.99 reais, or 10 percent, to 65 reais. Juliana Chu of Banco Espirito Santo SA raised her price target for Gerdau and Gerdau Metalurgica stock. She expects Gerdau preferred shares to rise to 69.70 reais a share by year end and Gerdau Metalurgica preferred shares to rise to 106 reais.
Mexico's Bolsa index rose to the highest in more than a week as investors speculated Wal-Mart de Mexico SAB, the country's largest retailer, will announce a positive forecast for growth in its operations.
Walmex surged 3.6 percent to 38.77 pesos as investors anticipated the company would announce growth plans tomorrow that may boost profits this year, said analyst Alejandro Fuentes Perez of BBVA Bancomer SA in Mexico City.
Walmex opened bank branches inside some stores last year, hoping to take advantage of increasing consumer credit in Mexico.
Some homebuilders rose as Mexican government housing officials said the sector's growth prospects this year are good. Mexico will build 800,000 homes this year as part of an effort to meet President Felipe Calderon's goal of constructing 6 million new houses by 2012, Carlos Gutierrez Ruiz, head of Mexico's Housing Commission, said in a Bloomberg Television interview in New York, where he attended a meeting with analysts Feb. 8.
Consorcio Ara SAB, Mexico's No. 4 homebuilder, gained the most in almost 11 months, rising 6.8 percent to 12.81 pesos.
Elsewhere in Latin America, the main indexes in Argentina, Colombia, Peru and Chile rose, while Venezuela's main stock index fell. The MSCI EM Latin America index gained 2.3 percent to 4,178.12. |
