By Shares of Vale and Companhia Siderurgica Nacional (CSN) saw significant gains following an announcement by China’s central bank regarding a new measure aimed at boosting economic growth.
Vale Shares Reach 69.98 Reais
Vale shares experienced a 3.9% increase, reaching 69.98 reais (equivalent to $14.36). Although the shares were down 24% from the end of last year through Wednesday’s close, the recent development has provided positive momentum.
CSN Shares Rise to BRL12.44
Companhia Siderurgica Nacional’s (CSN) shares rose to BRL12.44, further indicating the positive impact of China’s central bank’s decision. Brazil’s benchmark Ibovespa stocks index also saw a 0.8% increase during midday trading.
China’s Central Bank Cuts Banks’ Reserves Requirement Ratio
The People’s Bank of China has decided to cut banks’ reserves requirement ratio by a quarter of a percentage point. This move is expected to free up large sums of money for banks to lend, ultimately stimulating economic growth. Bruno Komura, an equities analyst at Ouro Preto Investimentos, noted that this decision has directly contributed to the rise in Vale’s and CSN’s shares.
Vale and CSN Poised to Benefit from Increased Demand
The decision by China’s central bank has significant implications for the global steel industry. With faster economic growth in China, there is an increased demand for steel and its primary ingredient, iron ore. Mining companies such as Vale and CSN are well-positioned to benefit from this surge in demand. In fact, JP Morgan analysts Rodolfo Angele and Tathiane Martins Candini have raised their forecasts for iron-ore prices for both this year and next year, with Vale being identified as a top pick in the sector.
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