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Barring a China or US Surprise There’s No Stopping Brazil Stocks Rally

Brazil's stock market Bovespa

Brazil's stock market Bovespa Brazilian stocks climbed Thursday, May 4, to a new record pushing the benchmark Bovespa index above 50,000 for the first time. The index of most-traded shares on the São Paulo exchange rose 746.68 or 1.5% to 50,218.22.

This is the fifteenth record this year and Bovespa has gained 13% and is trading at 13.34 times earnings per share. The first week of the year the gauge traded at an average 12.16 times earnings, up from 11.11 in the week ending October 6.

Vale, the world's second-largest miner rose 2.12 reais or 3%, to 73.01 reais.

PT International Nickel Indonesia, 60% owned by Vale, said first-quarter profit surged fivefold as higher nickel prices helped boost sales. Vale said in a statement that it got US$ 650 million in credit lines from a group of 19 banks led by France's BNP Paribas.

On Wednesday the Trade Ministry said Brazil's trade surplus widened more than forecast to 4.2 billion in April, from a revised 3.36 billion during March, as the price of commodities such as steel rallied.

Brazil's policy makers will probably cut the overnight rate to 10% by the end of 2008, according to the median estimate of about 100 economists in an April 27 central bank survey. They lowered the estimated from 10.5% in the previous survey. The economists cut their 2007 inflation forecast to 3.69% from 3.78%. The central bank targets inflation of 4% for 2007 and 2008.

Interviewed by "Folha de Sao Paulo", market analyst André Borghesan forecasted the Bovespa index would reach 52.000 points by the end of June.

"For the moment there are no identifiable motives for a sudden drop in stock prices unless there's a surprise from China or some very disappointing index in the US".



  • Show Comments (3)

  • AES

    Investment is guaranteed by the Law, or it is nothing but ‘the animal lottery’. If Brazilian Law is dysfunctional, it will not in the end, allow Bovespa to achieve its international potential of 75,000 this year. Where is operation Hurricane, where is the Law. This is either the 21st century or it is the age of Tamany Hall or Al Capone. The wealth of the people is held in the trust of the Law.

  • Ric

    Look, I donÀ‚´t mean to be unkind, Newsroom, but itÀ‚´s about the headline. “Barring a China or US Surprise ThereÀ‚´s No Stopping BrazilÀ‚´s Stocks Rally”.

    What about some terrorist action in Europe on the scale of 9-11? What about some VIP assassination? What about a major domestic scandal with feet? What about a Richter 7 in Japan?

    Every few years we run into a new crop of investment bankers that never experienced a world wide equities bust, and itÀ‚´s always the same yadyadayada. “If it dips, buy, it canÀ‚´t tank.”

  • bo

    You must have…
    accountability and transparency to instill confidence in any market. Until BOVESPA achieves this investments will be small, experimental, and considered “risky”.

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