Brazil Stocks Gain as Consumer Confidence Climbs; Bolsa Rises

May 26, 2009

Brazilian stocks gained for a second day after the country’s consumer confidence jumped to the highest level in eight months and increases in metals prices sent producers higher.

Vivo Participacoes SA, Brazil’s largest mobile-phone company, rallied as much as 1.8 percent after the Getulio Vargas Foundation said consumer confidence in May increased to its highest since September. Gol Linhas Aereas Inteligentes SA, Brazil’s second-largest airline, rose for the first time in a week on speculation its finances are improving and as traders increased bets for interest rate cuts. Cia. Siderurgica Nacional SA, Brazil’s third-biggest steelmaker, climbed 1.3 percent as metals prices advanced in Shanghai.

The consumer confidence report “shows that the economy has stopped getting worse,” said Marcelo Mesquita, a partner at Rio de Janeiro-based Leblon Equities Gestao de Recursos Ltda. and former head of Brazil equities for UBS AG. “It’s a good time for stock picking.”

The Bovespa index added 0.5 percent to 50,816.24. The BM&FBovespa Small Cap index gained 0.6 percent to 692.41.

Mexico’s Bolsa index climbed 0.4 percent and Chile’s Ipsa increased 1.4 percent. U.S. markets were shut for a holiday.The Bovespa rose 3.2 percent last week, its 10th advance in 11 weeks. The measure has rallied 35 percent in 2009 on speculation global government stimulus plans, record low interest rates and rising commodity demand will bolster growth.

International Investors

Foreign stock investors bought 9.8 billion reais ($4.8 billion) more than they sold in Brazil this year, according to the exchange’s Web site. In the first 20 days of May, the Bovespa stock exchange had 4.7 billion reais of inflows. That’s the most since a record-setting April 2008, when international investors added 6 billion reais to their Brazilian holdings.

The average value traded today on Brazil’s stock market was 1.6 billion reais, less than half the three-month average of 4.6 billion reais a day, according to Bloomberg data. Markets in the U.S. and U.K. were closed for a holiday.

The Getulio Vargas Foundation said that Brazil’s consumer confidence index rose to 102.1 in May from 97.6 in April.

Vivo added 0.8 percent to 37.70 reais. Redecard SA, which processes credit- and debit-card transactions, advanced 1.4 percent to 26.89 reais.

Gol rallied 1.9 percent to 8.70 reais. The airline’s planned share and bond sale are easing liquidity concerns, said Victor Mizusaki, an analyst at Itau Corretora in Sao Paulo.

Rate Speculation

In the overnight interest-rate futures market, the yield on contracts to January 2010, one of the most-actively traded in the BM&F commodity and futures exchange, declined five basis points to 9.29 percent. Economists forecast Brazil’s gross domestic product will contract 0.53 percent in 2009, compared with a previous estimate of 0.49 percent, according to a weekly central bank survey.

Copper futures gained in Shanghai after London prices rose as a weaker dollar boosted the appeal of alternative investments.

CSN climbed 57 centavos to 43.40 reais. Cia. Vale do Rio Doce, the world’s biggest iron ore miner, added 0.6 percent to 32.65 reais.

Natura, CCR

Natura Cosmeticos SA gained 0.6 percent to 27.15 reais. Brazil’s biggest cosmetics company was rated “neutral” in new coverage by UBS AG, which said it has “an attractive combination of solid long-term growth prospects, strong cash flow generation, solid balance sheet, and exceptional earnings resilience.”

Cia. de Concessoes Rodoviarias, Brazil’s biggest toll-road operator, advanced 1.1 percent to 28.40 reais. China may reduce purchases from the U.S. and increase buying from Brazil in the next few months, said the state-backed China National Grain and Oils Information Center, without elaborating.

The world’s largest soybean buyer may import more than 4 million tons of soybeans in May, the center added in an e-mailed statement today.

In Mexico, Controladora Comercial Mexicana SAB added 4.9 percent to 7.4 pesos. The retailer, which defaulted on debt in October, may be making “strong advances” in its negotiations with creditors, Citigroup Inc. analysts wrote in a note.

Grupo Simec SAB, a unit of Mexico’s largest steelmaker, rose 7.3 percent to 27.67 pesos. Metal prices climbed and Nippon Steel Corp. said steel demand may recover after July.

Cia Minera Autlan SAB, North America’s largest manganese producer, rose 6.8 percent to 28.98 pesos.

Cap SA, Chile’s largest steelmaker, gained 7.4 percent to 13,150 pesos.

“Asian metal prices are up, which could be positive news for Cap,” Sebastian Praetorius, an analyst at Penta Estrategia y Inversiones, said today by telephone from Santiago.

By Alexander Ragir and Hugh Collins
Source: Bloomberg (www.bloomberg.com)