The local index, the Bovespa, has traded above the important 50,000 level. Telcos and consumer sector names have led the moves recently as record-low interest rates drive domestic demand.
But do not underestimate the buying by China to help drive the resource sector to higher valuation levels (upgrades by analysts, etc...). I've said it before and continue to maintain the Chinese are diversifying away from the USD and USD assets in the longer term. Part of this process is through the accumulation of commodity reserves and inventory building. Brazil will be a main beneficiary of this approach, and it will not be a one-month event.
Players to watch here: Petrobras (PBR), Cia Vale do Rio Doce (VALE), Gerdau SA (GGB), and Cia Siderurgica Nacional SA (SID).
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