Brazil Stocks Advance on Commodity Rise, Rousseff Election Win - BusinessWeek

November 01, 2010, 10:04 AM EDT By Alexander Ragir

Nov. 1 (Bloomberg) -- Brazil’s Bovespa stock index rose for a second day as commodities advanced and traders reduced bets interest rates would increase after President-elect Dilma Rousseff vowed to restrain spending after yesterday’s election.

Vale SA, the world’s biggest iron ore producer, rose as metals prices advanced. MRV Engenharia e Participacoes SA and Rossi Residencial SA gained on Rousseff’s victory. Cosan SA Industria & Comercio, the world’s biggest sugar-cane processor, climbed after saying its unit, Cosan Overseas Ltd., sold $300 million of perpetual bonds to yield 8.25 percent.

“This election was somewhat of an overhang on the Bovespa,” said Ed Kuczma, an emerging markets analyst at Van Eck Associates in New York, which manages $21 billion. “As long as Brazil continues on the fundamentals Lula enacted, Brazil should be fine.”

The Bovespa stock index rose 0.7 percent to 71,137.14 at 9:44 a.m. New York time. The Bovespa stock index advanced on Oct. 29, capping a second monthly gain, as homebuilders and retailers rallied on easing concern policy makers will raise borrowing costs to cool the economy.

The real was little changed at 1.6996 per dollar today.

Yields on interest-rate futures contracts due in January 2012 fell 3 basis points, or 0.03 percentage point, to 11.31 percent.

Copper rose in London as manufacturing accelerated in China, the world’s biggest consumer of the metal.

Vale rose 0.6 percent to 48.03 reais. Cosan gained 2.2 percent to 27.44 reais.

Rousseff’s Promises

Rousseff won 56 percent of the vote yesterday compared with 44 percent for Jose Serra, the former governor of Sao Paulo state. The Brazilian people won’t accept governments that spend at “unsustainable levels,” Rousseff told supporters in Brasilia after the election results were announced.

Rossi climbed 1.9 percent to 16.97 reais. MRV advanced 1.4 percent to 16.83 reais.

Rousseff won by promising continuity with Brazilian President Luiz Inacio Lula da Silva, whose policies lifted 21 million Brazilians out of poverty since 2003 and created a record 15 million jobs.

Maintaining Lula’s economic policies may be insufficient to allow Rousseff to match his successes, which include winning Brazil’s first investment-grade credit rating in 2008. Traders are pushing up borrowing costs for Brazil, which has $957 billion in public debt, on bets that Rousseff will fail to curb spending, forcing policy makers to raise interest rates in 2011.

--Editors: Glenn J. Kalinoski, Brendan Walsh

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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