Thursday, March 2, 4:45 PM EST (Thomson Financial): Latin American stocks
were mixed, with Brazilian shares easing lower, as investors locked in some
profits following yesterday's strong gains on enthusiasm over an upgrade to
the country's sovereign credit rating. On the up side, Mexico's bolsa edged
higher on strength in mining shares, while pleasing earnings from Tenaris sent
Argentina's market skyward.
Brazil's Bovespa Index dipped 52.03 points, or 0.13%. Mexico's benchmark
Bolsa Index added 43.59 points, or 0.23%, while Argentina's Merval Index
jumped 53.35 points, or 3.06%.
Brazilian stocks dipped, as investors took profits after the market rose
to a record high yesterday on news of an upgrade to the country's long-term
sovereign credit rating. On Tuesday, Standard & Poor's Ratings Services raised
Brazil's long-term sovereign credit ratings to BB from BB-, citing "the
continued and marked improvement in Brazil's external debt indicators." S&P's
outlook for Brazil is stable.
Some tame inflation data helped to limit the market's losses. The Getulio
Vargas institute said its IPC-S consumer price index inched up 0.01% in
February, a sharp deceleration from January's increase of 0.10%. The data
helped to bolster hopes that inflation is under control, allowing the Central
Bank to continue or perhaps accelerate its interest-rate cutting cycle.
In other economic data, Brazil posted a trade surplus of US$2.82 billion
in February, up slightly from a US$2.77 billion surplus a year earlier, the
Ministry of Development, Industry and Foreign Trade reported. Exports in
February totaled US$8.75 billion, while imports totaled $5.93 billion. Some
local companies have expressed concerns that their earnings from exports will
be negatively impacted by a more than 25% surge in the real against the U.S.
dollar over the past year. However, Brazil's trade surplus has continued to
expand in recent months despite the appreciating local currency.
Mexican stocks remained strong today, despite a slight downturn in U.S.
shares on disappointing retail sales. Despite the continuation of a nationwide
mining strike, mining shares advanced thanks to strength in underlying
commodity prices.
In corporate reports, a major investment bank raised its price target for
Femsa to US$110 from US$95. The bank commented that the firm "is finally
getting some substantial traction on its 2000-2004 restructuring efforts."
Elsewhere, another large investment firm raised Cemex's price target to
US$69 from US$67 due to higher-than-expected cement volumes and prices.
On the deal front, glass maker Vitro SA sold its 51% stake in Quimica to
partner Solutia for US$20 million.
Elsewhere, a nationwide strike by members of the National Mining and Metal
Workers Union entered its second day. The strike was sparked by the Labor
Ministry's recognition of union dissident Elias Morales, who is challenging
current union leadership. Mining firms are asking the government to step in
and end the strike.
Argentine issues rallied on the day, hitting a record high in peso terms,
following robust earnings from steel pipemaker Tenaris. The firm benefited
from strong global demand for its seamless pipes.
Tenaris, which is headquartered in Luxembourg, but owned by Argentina's
Techint, said that its fourth-quarter net profit fell 13% to US$414.8 million
from US$479.5 million a year ago, which included a US$123 million gain. Net
sales, meanwhile, leapt to US$1.9 billion from US$1.3 billion. Operating
profit jumped 62% to US$576.9 million from US$355.4 million last year.
In other news, textile manufacturer Alpargatas surged, following reports
from local papers that the firm may soon be sold to Brazil's Camargo Correa.
-- 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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