Brazilian shares went up, November 30, as a pullback in oil prices, weakness in the U.S. dollar and economic news encouraged buyers. The country’s advance was a departure from a fall in the U.S. market, on news November consumer confidence fell to 90.5 from 92.9 in October, missing the anticipated reading of 96.8.
However, U.S. third-quarter gross domestic product was revised to 3.9% from 3.7% in the advanced reading. Analysts had expected GDP to remain unchanged. Brazil’s benchmark Bovespa Index strengthened 273.57 points, or 1.10%.
Brazilian issues rose to an all-time high, as a drop in global oil prices and a stronger domestic currency drove expectations for lower interest rates.
Oil prices declined on the session, as traders anticipate a rise in distillate inventories in tomorrow’s U.S. weekly inventory report.
Also, analysts indicated that the rally in Brazil’s market was powered by investors who are attempting to raise the value of their portfolios for November and were further encouraged by Brazil’s latest economic news.
On that front, data showed Brazil’s economy remains on course to sustain sizable expansion in the medium term.
Brazil’s third-quarter GDP surged 6.1% from a year ago, its highest year-on-year rate since 1996.
Additionally, investment soared 20.1% in the period from the year before.
While the GDP rise was shy of forecasts, analysts noted that the slightly slower growth may be interpreted as a sign of a more sustainable performance, while preventing the economy from overheating.
The Brazilian government also revised several previously announced GDP figures, indicating that economic activity began increasing last year, earlier than previously thought.
Highlighting the Brazilian real’s appeal to foreigners, No. 3 Brazilian bank Unibanco launched an issue denominated in reais, valued at the equivalent of US$ 50 million.
Unibanco joined two other local banks, Bradesco and the local branch of ABN Amro, with all three saying they would issue at least US$ 200 million worth of bonds denominated in reals but aimed at foreign investors.
Turning to research notes, a major Wall Street investment house initiated coverage of ordinary shares in Brazilian phone companies Telemar and Brasil Telecom Participações SA, highlighting their solid performance in recent months in addition to tag-along rights for minority shareholders.
The analyst explained that if either of the two firms are sold, “the ordinary minority shareholders can sell their shares at 80% of the price paid for the controlling stake; the preferred shares have no tag-along rights.”
It set a 12-month price target on Brazil Telecom’s voting shares at 32 reais and on Telemar’s voting shares at 55 reais.
Thomson Financial Corporate Group