Brazil Bovespa Rises, led by Steelmakers: World's Biggest Mover

Brazilian stocks rose the most this year, led by steelmakers, on speculation that global mergers and acquisitions will strengthen such Brazil-based companies as Gerdau SA, and Cia. Siderurgica Nacional.

Steelmakers Gerdau, CSN, Usinas Siderurgica de Minas Gerais and Arcelor Brasil SA accounted for almost a third of the gain in the Bovespa index, after local regulators ordered Arcelor Mittal, the world's biggest steel company, to raise its offer for the remaining stock in its Brazilian unit.

``It's an ongoing story of consolidation in the industry,'' said Alexander Carpenter, who manages $1 billion in Brazilian equity as head of HSBC Investments in Sao Paulo. ``Brazilian steelmakers can be buyers or sellers.''

Arcelor Brasil's stock jumped the most in a year, surging 12 percent to 47.60 reais, after Mittal was ordered by Brazil's securities regulator to pay 51.27 reais ($24.32) a share to complete the largest takeover ever in the industry. Last month CSN, as Brazil's third-largest steelmaker is known, lost its bid to buy U.K.'s Corus Group Plc, which was bought by Tata Steel Ltd. for $12 billion, the second-biggest purchase of a steel company.

Spurring takeover talk worldwide, the Times of London today reported BHP Billiton Ltd., the world's biggest mining company, and Rio Tinto Group Plc, the No. 3 miner, are independently considering plans for a $40 billion offer for New York-based Alcoa Inc., the world's largest aluminum producer. Alcoa and Rio Tinto declined to comment today. Melbourne-based BHP denied the report, which cited unidentified people.

Index Soars

The Bovespa index of most-traded shares on the Sao Paulo exchange rose 1262.70, or 2.9 percent, to 45,197.45. It is the biggest gain since Dec. 4, 2006, and the largest move among markets included in global benchmarks. Steelmakers made up 399 points of the increase. In Mexico, the Bolsa index gained 290.42, or 1 percent, to a record 28,262.65, surpassing a Feb. 8 high.

Gerdau, Latin America's biggest steelmaker, rose 2.19 reais, or 6.1 percent, to 38.19 reais. CSN gained 3.99 reais, or 5.6 percent, to 75.60 reais, while Usiminas, Brazil's second-largest steelmaker, climbed 7.15 reais, or 8.2 percent, to 94 reais.

Cia. Vale do Rio Doce, the world's biggest iron-ore miner, climbed 2.16 reais, or 3.6 percent, to 61.73 reais. Merrill Lynch boosted its stock price target for the company's preferred and common American depositary receipts to $42 from $34, citing cost reductions and higher iron ore prices. Merrill analyst Felipe Hirai wrote in a report that he ``strongly'' recommends buying Vale's preferred ADRs.

In Mexico City, Wal-Mart de Mexico SA, Latin America's largest retailer, rose for the first session in five, as it said at an investor meeting it would open 125 stores in Mexico this year. Shares rose 99 centavos, or 2.1 percent, to 48.67 pesos.

Media Company

Grupo Televisa SA, the world's largest Spanish-language media company, rose for a second session, bringing its gains for the week to 3.9 percent, after falling 3.9 percent in the previous five sessions. The company reports fourth-quarter earnings Feb. 21.

``Today, companies that were hit hard at the end of last week are coming back to their levels before that,'' said Alejandro Fuentes Perez, an analyst at BBVA Bancomer in Mexico City.

The Bolsa may resume its decline when companies finish reporting fourth-quarter results at month's end, Fuentes Perez said.

``This month's rise has been affected by the quarterly reports,'' he said. ``We're still advising caution for the weeks that follow.''

The main stock index in Argentina, Chile, Colombia, Peru and Venezuela also rose. The Morgan Stanley Capital International index of Latin American shares rose for the first session in five, gaining 2.1 percent, the most since Nov. 29, to 3112.62.

The following stocks are making significant gains or losses in Latin American markets today. Symbols are in parentheses after the company name. In Brazil, the preferred share is usually a company's most-traded class of stock.

Brazil

Brazil's ethanol and sugar producers rose after Valor Economico reported that Vinod Khosla, co-founder of Sun Microsystems Inc., and other venture capitalists plan to invest in a $2 billion fund to back ethanol projects in Brazil. The newspaper didn't say how it got the information.

Cosan SA Industria & Comercio (CSAN3 BS), the world's biggest combined sugar and ethanol producer, rose 1.89 reais, or 4.7 percent, to 41.90 reais.

Sao Martinho SA (SMTO3 BS), Brazil's second-largest sugar and ethanol producer, rose on its second day of trading, climbing 1.04 reais, or 4.4 percent, to 24.70.

CPFL Energia SA (CPFE3 BS) rose 28 centavos, or 1 percent, to 28.65 reais. Brascan Corretora reiterated its ``buy'' rating on the Brazilian energy distributor, analyst Felipe Cunha wrote in a report e-mailed yesterday. The company should show improved revenue in the fourth quarter on expanding electricity consumption by customers, as well as improved margins on earnings before interest, taxes, depreciation and amortization, Cunha wrote.

Mexico

Alsea SAB (ALSEA* MM), a restaurant operator, rose 91 centavos, or 5.1 percent, to 18.91 pesos. Alsea said it opened three new stores in January, two Domino's Pizza outlets and a Starbucks Coffee franchise. The openings increased the number of corporate-owned restaurants to 692, Alsea said in a statement yesterday.

America Movil SAB (AMXL MM), Latin America's largest mobile phone company, rose 30 centavos, or 1.2 percent, to 26.22 pesos. Analyst Stephen Graham at UBS said last week fourth-quarter results announced Feb. 7 might spur a rally in the stock. The company reported a 25 percent increase in sales, beating the estimates of three analysts polled by Bloomberg. In a note yesterday, Graham said America Movil was one of the top performing telecommunication stocks last week, when it rose 4.7 percent.

Industrias Penoles SA (PE&OLES* MM), Mexico's largest silver miner, rose 1.63, or 1.5 percent, to 107.22 pesos. Penoles reached an agreement with the country's miners' union, avoiding a strike yesterday by 6,000 workers. The agreement will give miners a 4 percent increase in wages and benefits, the union said in an e-mail statement yesterday.

Grupo Mexico SAB (GMEXICOB MM), Mexico's largest copper miner and the owner of Mexico's largest raiload, rose 2.35 pesos, or 5.1 percent, to 48.13 pesos. The company won a court ruling that may end a government probe of alleged collusion in the purchase of a railroad company in 2005.

Telefonos de Mexico SA (TELMEXL MM), Latin America's biggest fixed-line telephone company, fell 43 centavos, or 2.6 percent, to 16.36 pesos. Telmex, as the company is known, said fourth-quarter net income fell 14 percent to 7.4 billion pesos. Analysts including Rizwan Ali at Bear Stearns said earnings per share and domestic long distance fell short of their estimates. Bear Stearns has a ``market overweight'' rating on the stock.

source:www.bloomberg.com