Thursday, February 9, 4:45 PM EST (Thomson Financial): Latin American
stocks were mixed to higher, with Brazilian stocks advancing, as signs of
accelerating local inflation failed to dent optimism about the economy and
interest rates. Meanwhile, Mexican shares climbed on bargain hunting following
a four-day decline. On the down side, Argentine issues were dragged down by
investor caution ahead of earnings releases later this month.
Brazil's Bovespa Index gained 382.90 points, or 1.05%. Mexico's benchmark
Bolsa Index added 108.09 points, or 0.59%, while Argentina's Merval Index
dropped 12.7 points, or 0.74%.
Brazilian stocks jumped, as investors shrugged off a report showing
consumer price inflation accelerated in January due in part to higher ethanol
fuel prices. The Brazilian Census Bureau (IBGE) said the government's official
IPCA consumer price index rose 0.59% in January compared with a 0.36% increase
in December, exceeding expectations for inflation of 0.55%. Inflation in the
twelve months through January accelerated to 5.70% from 5.69% for the full-
year 2005. The data was the latest sign of mounting inflation, bolstering
expectations that Brazil's central bank will continue to cut Brazil's lofty
Selic interest rate at a gradual pace. Strong industrial output data released
Tuesday also fueled expectations for a continued gradual approach to rate
cuts.
In corporate news, mining giant Companhia Vale do Rio Doce (CVRD) said
late yesterday that it sold its stake in ferrosilicon producer Nova Era
Silicon to JFE Steel Corporation for $14 million. CVRD said the sale is part
of its move to focus on manganese ore and alloys production through wholly
owned subsidiaries.
Shares of steel maker Gerdau were active again today after the company
announced upbeat fourth-quarter earnings results yesterday. The company also
said it was raising its expected capital investment budget in a bid to
modernize and expand its steel plants.
State-run oil giant Petrobras was in focus after confirming yesterday that
it has been in talks with Russian natural gas monopoly Gazprom about a
possible cooperation of the two companies.
Elsewhere, Mexican shares were in recovery mode today, after four-straight
losing sessions. The Mexican Stock Exchange delisted shares of 21 firms that
did not meet the exchange's requirements. In economic headlines, the Bank of
Mexico reported that the Consumer Price Index rose 0.59% in January, lifting
annual inflation to 3.94% from 3.33% at December's end. The most recent result
was in line with expectations.
Retail giant Walmex announced that its sales for 2005 jumped 13.7% to a
record 164.4 billion pesos from 2004. The firm also said that its board
approved a two-for-one stock split. Walmex will report earnings later this
evening.
Meanwhile, wireless provider America Movil gave back some of the gains it
attained yesterday when it posted strong quarterly financial results.
Today, a major investment bank lifted its earnings and share price estimates
due to the firm's "higher operating estimates."
Fast food operator Alsea SA announced plans to open 89 outlets in 2006,
which would bring its total to 815. Included in this year's opening targets
are 24 Domino's Pizza stores and 48 Starbucks coffee shops.
Select financial firms released earnings last night. Santander Serfin, the
Mexican unit of Spain's Santander Central Hispano SA, said that its fourth-
quarter net profit rose 3% year over year to 1.53 billion pesos. For the full-
year 2005, the firm's net profit rose 9% to 6.75 billion pesos when compared
to 2004, while the bank's loan portfolio advanced 11% from a year ago.
Separately, Inbursa said that a swap position contributed to a sharp decline
in its fourth-quarter net profit. The firm's net profit landed at 390.3
million pesos, compared to 1.46 billion pesos a year ago. For 2005, Inbursa's
net profit declined to 2.91 billion pesos from 5.55 billion pesos in 2004.
Argentine issues turned lower today, as investors await earnings releases
later this month before buying into the market. In economic reports,
Universidad Torcuato Di Tella said that consumer confidence slipped 1.5% in
February month-over-month, and inched up 0.4% from a year ago. The consumer
confidence index is up about 12% since September of last year.
In earnings news, power transporter Transener posted a net profit of 612.1
million pesos for the full year ended December 31, compared to a loss of 121.5
million pesos in 2004.
-- Paul.Davee@thomson.com; Thomson Financial Corporate Services
This is Thomson Financial Corporate Services Latin American Commentary.
The information herein is believed to be true and accurate, we take no
responsibility for inaccurate information and reserve the right to update our
reports. If you have any questions please e-mail James Sang at
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SOURCE Thomson Financial Corporate Group
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