Wednesday, February 22, 4:45 PM EST (Thomson Financial): Latin American
stocks were mixed to higher, with Brazilian shares attracting some buyers, as
the latest U.S. and Brazilian inflation data helped to bolster optimism about
interest rates at home and abroad. Meanwhile, Mexico's Bolsa followed the U.S.
market higher.
Brazil's Bovespa Index added 80.43, or 0.21%. Mexico's benchmark Bolsa
Index jumped 283.08 points, or 1.53%, while Argentina's Merval Index fell
15.39 points, or 0.88%.
Brazilian stocks edged up, as investors digested relatively tame Brazilian
and U.S. inflation data. The Brazilian Census Bureau said inflation as
measured in the IPCA-15 was nearly unchanged at 0.52% in the January 14 to
February 10 period, from 0.51% in the December 14 to January 13 period.
Economists had expected an increase of 0.60%. The news bolstered expectations
the central bank will continue its interest-rate cutting campaign. Moreover,
some analysts expect the bank to accelerate the pace of cuts.
Meanwhile, the latest U.S. consumer price index report helped to ease
worries about inflation in the U.S. The core consumer price index inched up
0.2%, as expected, adding to hopes that the U.S. Federal Reserve is nearing
the end of its monetary tightening cycle. Higher U.S. interest rates tend to
divert foreign investment flows away from emerging markets like Brazil.
In other news, a public opinion poll released today by the Datafolha
institute showed that Brazilian President Luiz Inacio Lula da Silva would be
re-elected for a second term, if presidential elections were held today. The
poll indicated that Social Democrat Jose Serra would come in second place.
On the corporate front, private bank Banco Bradesco posted a fourth-
quarter net profit of 1.463 billion reais, up from 1.058 billion reais a year
earlier, helped by continued expansion of its credit portfolios. "The
impressive results produced by our credit portfolios could continue in 2006,"
the company said.
An influential investment bank raised its year-end price target for bank
Itau to US$37 from $US30. "While we think ITU has reached valuation multiples
that have limited expansion potential...the bank's solid growth prospects
should help the stock keep pace with the overall market," the firm said.
Mexican shares rallied, following a bout of profit-taking yesterday. Local
shares also received a boost from positive U.S. markets, which received
support from lower oil prices and mostly benign retail inflation data.
Broadcaster TV Azteca said that a one-time charge related to goodwill
accounting of disbanded Grupo Todito dragged on the firm's fourth-quarter net
profit. TV Azteca's net income tumbled 82% to 89.2 million pesos from 459.9
million pesos a year ago. Excluding the charge, the firm's net income would
have risen to 557 million pesos. For the full year, net income fell to 1.22
billion pesos from 1.60 billion pesos in 2004.
On the corporate front, Soriana moved higher on the day, after a major
investment bank upgraded the retailer to "buy" from "neutral," as it is still
"the most attractive valued name in our food and broadline retail universe."
Yesterday, Soriana said its fourth-quarter profit fell to 647 million pesos
from 1.19 billion pesos a year ago, as higher financial costs and taxes hurt
the most recent quarter.
In other earnings news, airport operator Asur said that its fourth-quarter
net income fell drastically as a result of Hurricane Wilma. The firm's net
income came in at 6.2 million pesos, compared to 201.1 million pesos a year
ago, as sales tumbled 33% to 324.5 million pesos. Passenger traffic declined
33% year-over-year. EBITDA fell 53% to 133.4 million pesos.
Home construction firm Ara intends to invest 4.35 billion pesos in
developments in Morelos State over the next five years.
Elsewhere, Argentine issues slipped lower on the day amid light share
volume on a slow news day. Lower oil prices put some pressure on the Merval,
with Tenaris tumbling as it is an oil supplier.
-- 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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