Brazil Leads Every Global Stock Market on Privatization Shocker

(Bloomberg) -- Brazilian stocks led world gains while troubled state-run Eletrobras jumped the most in over two decades after a government proposal to privatize the utility amid the country’s deep fiscal crisis, prompting demand for state-run companies.

Eletrobras’s voting shares surged as much as 51 percent in Sao Paulo trading, the biggest intraday jump since August 1994, after Deputy Energy Minister Paulo Pedrosa said the government could raise as much as 20 billion reais ($6.31 billion) by shedding its controlling 67 percent stake in Latin America’s largest power company.

The unexpected Brazilian government proposal to privatize Eletrobras could unlock value for shareholders and make the company more efficient, while also changing the dynamics in the entire power sector in Brazil by inspiring other state-owned names such as Companhia Energetica de Minas Gerais (Cemig) and Companhia Paranaense de Energia (Copel) to follow suit, analysts from Itau to Santander said.

• Cemig climbed as much as 7.2 percent, while Copel rose 4.5 percent; Companhia Energetica de Sao Paulo (Cesp), whose owner, the state of Sao Paulo, has already set a price per share for its privatization, gained 2.7 percent
• State owned banks also joined the euphoria with Banco do Estado do Rio Grande do Sul (Banrisul) advancing 7.2 percent and Banco do Brasil climbing 5 percent
• The Ibovespa climbed 2 percent to 70,018.63 in Sao Paulo, the most among the world’s biggest equity markets, to the highest level since Jan. 2011
• The iShares MSCI Brazil Capped ETF, the nation’s largest exchange-traded fund, advanced 2.4 percent to $39.67, the highest level since May 17

To contact the reporter on this story: Paula Sambo in Sao Paulo at psambo@bloomberg.net.

To contact the editors responsible for this story: Arie Shapira at ashapira3@bloomberg.net, Steven Fromm