Monday, February 13, 4:45 PM EST (Thomson Financial): Latin American
stocks sank into the red, as investors anxiously awaited the new U.S.
Federal Reserve chairman's congressional testimony later this week for
improved clarity on the outlook for U.S. interest rates. Continued profit
taking following January's robust gains also weighed.
Brazil's Bovespa Index fell 861.32 points, or 2.33%. Mexico's benchmark
Bolsa Index dropped 414.95 points, or 2.27%, while Argentina's Merval
Index declined 22.45 points, or 1.32%.
Brazilian stocks tumbled, as investors took a cautious stance ahead of
congressional testimony Wednesday from new U.S. Federal Reserve chairman
Ben Bernanke. Some investors fear that indications the Fed might continue
its monetary tightening cycle longer than expected could diminish the
strong foreign investment inflows that have boosted the Bovespa in recent
months. Higher interest rates in developed countries like the U.S. tend to
divert investment flows away from emerging markets like Brazil.
On the corporate front, Petrobras was in focus after indicating there is a
possibility it may invest about US$5 billion in Bolivia depending on the
outcome of negotiations with the Andean country's government. However, no
definitive agreements have been reached in Bolivia, the company said.
Meanwhile, a major investment bank raised its price targets for several
Brazilian telecoms, citing lower country risk premium. "We remain bullish
on the wireless sector as we expect a more rational competitive
environment and...focus on profitability in 2006," the bank said.
In earnings news, online retailer Submarino SA reported a fourth-quarter
net profit of 12.6 million reais, up sharply from 3.9 million reais in the
year-ago period. Also, gross revenue rose to 191 million reais from 126
million reais a year earlier.
Also reporting, airline TAM's fourth quarter net profit fell to 65.3
million reais from 83.3 million reais in the year-ago period due to higher
fuel, marketing and operational costs. Revenues climbed 17.6% to 1.58
billion reais due to improved demand following reduced operations at some
other local carriers.
Mexican issues remained depressed today, as the key IPC index has fallen
five out of the past six sessions. Meanwhile, investors are also awaiting
testimony from the new U.S. Fed Chief Ben Bernanke, when he addresses the
U.S. Congress in semi-annual testimony later this week. Closer to home,
Telmex's financial results are due sometime this evening.
In economic reports, the Finance Ministry said that industrial production
rose 2.7% in December from a year ago, bolstered by an increase in
construction activity and an improvement in the auto sector. For the full
year 2005, production gained 1.6%.
In Argentina, shares followed the broader region into the red. Volume was
weak on the day. Investors are also awaiting the expiration of options
contracts, which begins this Thursday.
Textile manufacturer Alpargatas announced that it was not for sale,
contrary to local reports that said several Brazilian firms were
interested in the Argentine company.
In earnings news, BBVA Banco Frances posted a quarterly net profit of 31
million pesos, reversing a year-earlier net loss of 13.2 million pesos.
For 2005, the bank posted a net profit of 117.2 million pesos, after
posting a net loss of 54 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
james.sang@tfn.com or call 646.822.6233. For more information about
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SOURCE Thomson Financial Corporate Group
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