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Issue #592

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2014 Media Kit

Banks to top Brazil stock market index weightings under proposal

By: | at 10:38 AM | International Trade  

Brazilian banks would become the top-weighted companies in the country’s benchmark stock index, outranking energy and mining companies, under a proposed modification by the country’s stock market operator.

Brazil’s sole listed financial bourse BM&FBovespa SA offered a second preview on Wednesday for its proposals to modify the benchmark Bovespa stock index for the May through August period.

The bourse releases three previews for the index before the changes take effect. The third preview will be released May 2.

Under the latest proposal, shares of Brazil’s largest non-government bank, Itau Unibanco Holding SA, would carry a 9.52 percent weighting on the index under the proposals, up from 9.41 percent in the prior preview released on April 1.

Rival Banco Bradesco saw its weighting rise to 7.6 percent from 7.25 percent in the earlier preview.

Both banks will surpass preferred shares of state-run oil firm Petroleo Brasileiro SA, known as Petrobras, and preferred shares of Vale, which now hold the top weightings in the index with 7.81 percent and 7.34 percent, respectively.

Petrobras has lost about half of its market value over the past three years, hurt by a government policy that forces the company to sell imported fuel at a loss to tamp down inflation.

BM&FBovespa makes modifications to the index every four months. A new Bovespa index weighting scheme this year takes into account market value as opposed to trading volume, which was used in previous years.

Shares of mining company MMX Mineração e Metálicos SA were included in BM&FBovespa’s preview, increasing the likelihood that they will be added to the official index for the period.

BM&FBovespa proposes removing from the index the shares of medical diagnostics firm Diagnósticos da América SA, known as Dasa SA. Logistics firm Prumo Logistica SA , formerly known as LLX, was re-included in the second preview after having been excluded from the April 1 preview.