Bovespa blues

14 January 2014 By Christopher Swann

The Bovespa’s 16 pct decline last year has left Brazilian stocks relatively undervalued. For one explanation, investors need only look at Brasilia’s efforts to prod a private sugar firm to absorb the nation’s top rail operator. Such statist matchmaking warrants a discount.

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Brazil’s federal government is working to encourage a takeover of America Latina Logistica, the country’s largest railroad operator, by a company that would invest in the nation’s rail network, daily o Estado de S.Paulo reported on Jan. 10.

The newspaper said Brazil’s national development bank BNDES was urging Cosan SA Industria e Comercio, a sugar producer, to buy a controlling stake in the railroad.

Brazil’s Bovespa stock index fell 16 percent in 2013, the second largest fall in the world.

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