Brazilian stocks gained the most in almost a month after investors bought shares of retailers, steelmakers and transportation companies that will benefit from the 2016 Olympics.
Brazil’s planned $11 billion in infrastructure spending for Rio de Janeiro’s 2016 Olympic Games spurred gains of more than 3 percent for steelmaker Gerdau SA, electric company Light SA and Dufry South America Ltd., a duty-free retailer in Brazilian airports. Vale SA, the world’s biggest iron ore miner, advanced 1.5 percent after Bank of America Corp. said earnings growth may top estimates as consumer spending grows and corporate- financing costs drop.
“Euphoria will last for a few days,” said Geoffrey Dennis, Citigroup Inc.’s Latin American equity strategist. “Then we’ll get back to the usual thing — interest rates, economy and the global markets.”
The Bovespa stock index added 2 percent to 62,369.30. Brazilian stocks rallied on Oct. 2, making the Bovespa the world’s best-performing major index, after Rio de Janeiro was awarded the 2016 Summer Olympic Games, luring investment to the country. The BM&FBovespa Small Cap index rose 2.3 percent to 987.24, led by Light SA and Lojas Renner SA.
Mexico’s Bolsa gained 1.9 percent, Chile’s Ipsa rose 1.2 percent and the MSCI Emerging Markets index added 1 percent.
Brazilian steelmakers and cement producers will benefit from spending on stadiums and transport projects, and the influx of visitors will boost airlines and retailers, Dennis said.
Localiza Rent a Car SA surged 4.9 percent to 19.45 reais on speculation it will benefit from increased tourism. Log-in rose 0.6 percent as Rio prepares to invest in transportation before the Olympics. Dufry jumped 13 percent to 35.01 reais. Tam, Brazil’s biggest airline, climbed 1.4 percent, while Gerdau, which provides long-steel for infrastructure development, added 3.9 percent.
Rio’s victory over Chicago, Madrid and Tokyo will help sustain Brazil’s growth by injecting $51.1 billion into Latin America’s largest economy through 2027 and add 120,000 jobs annually through 2016, according to studies by a Sao Paulo business school for the Ministry of Sports. The Olympic Games will add 1 percent to gross domestic product in coming years, Finance Minister Guido Mantega said yesterday. The 2014 World Cup, which Brazil will host, will add another 1 percent to GDP, Mantega said.
Vale added 1.5 percent to 37.14 reais.