Brazil Stocks Rise With Vale as Bargain Hunters Bet on Recovery

(Bloomberg) -- The Ibovespa rose after its biggest three-day drop since 2011 attracted bargain hunters who remain optimistic over Brazil’s recovery from recession.

Miner Vale SA contributed the most to the benchmark equity index’s advance as the weakening of the real improved the profit outlook for exporters. Steelmakers Usinas Siderurgicas de Minas Gerais SA, known as Usiminas, and Gerdau SA were the best performers on the gauge.

After slumping 7.8 percent in three sessions, the Ibovespa ended Friday trading at 12.8 times estimated earnings, its cheapest level since Sept. 29. Brazilian equities are attractive to foreign investors because the real has plunged since Donald Trump won last week’s U.S. presidential election. And while Brazil’s economic rebound may take longer than previously expected as the central bank slows the pace of rate cut, the Latin American nation is still on track to win back investor confidence, according to Raphael Figueredo, an analyst at brokerage Clear Corretora.

"The Trump effect may delay the recovery, but fundamentals of our economy haven’t changed," Figueredo said from Sao Paulo.

The Ibovespa added 0.8 percent to 59,657.46 at the close of trading in Sao Paulo as 34 of its 58 stocks rose. Vale advanced 4.7 percent, Usiminas climbed 7.7 percent and Gerdau gained 10 percent. An MSCI index of materials producers rose the most among 11 industry groups.

Brazil’s gross domestic product is forecast to shrink 3.37 percent this year, according to a weekly survey by the central bank published Monday. That’s a bigger contraction than in the previous estimate of a 3.31 percent contraction. The economists also reduced their 2017 growth estimate to 1.13 percent from 1.2 percent.

Oi jumped 4.8 percent after O Globo reported that investors were preparing a 10 billion-real bid for the phone company. The newspaper cited an unnamed person familiar with the issue.

--With assistance from Ney Hayashi To contact the reporters on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net, Marisa Castellani in Sao Paulo at mcastellani7@bloomberg.net. To contact the editors responsible for this story: Brendan Walsh at bwalsh8@bloomberg.net, Sebastian Boyd, Jessica Brice