Friday, March 3, 4:45 PM EST (Thomson Financial): Latin American stocks
advanced, with Brazilian shares gaining on continued investor enthusiasm over
Brazil's improved credit rating, while the end of a nation-wide mining strike
lent support to Mexican issues.
Brazil's Bovespa Index rose 113.91 points, or 0.29%. Mexico's benchmark Bolsa
Index added 86.92 points, or 0.46%, while Argentina's Merval Index jumped
28.34 points, or 1.58%.
Brazilian stocks rose, resuming a recent run-up on Tuesday's news that
Standard & Poor's raised Brazil's long-term sovereign credit rating to BB from
BB-, citing "the continued and marked improvement in Brazil's external debt
indicators." The upgrade reinforced investors' faith in Brazil's solid
economic fundamentals against a backdrop of declining interest rates. The
central bank is seen lowering rates by up to three-quarters of a percentage
point at its meeting next week amid indications of tame inflation.
However, the Bovespa's gains may have been limited by signs of higher global
interest rates, as the European Central Bank hiked rates today and indicated
more tightening ahead, while disappointing inflation data fueled concerns that
Japan will soon raise interest rates. Higher interest rates in developed
economies tend to draw investment flows away from emerging markets like
Brazil.
In political developments, a local newspaper reported today that Finance
Minister Antonio Palocci could leave his post to coordinate the electoral
campaign of President Luiz Inacio Lula da Silva. Palocci had served as Lula's
campaign coordinator in the 2002 election. He said it is Lula's decision
whether he would be most useful as campaign manager or finance minister in the
months leading up to the October election.
On the corporate front, oil giant Petrobras was in focus after local media
reported that Rio de Janeiro state ended an income tax exemption that will
cost Petrobras about US$24 million in extra costs a month. Petrobras will
reportedly lobby the state for a reversal of its decision and may pursue a
legal action.
Mexico's winning streak continued today, despite lackluster trading in the
U.S. markets, following a revenue warning from chip titan Intel. An end to a
nationwide strike brought relief to mining-related firms, including Grupo
Mexico.
Mexican miners and steel workers started returning to work today, following a
two-day nationwide strike. The Labor Ministry had declared the strikes
illegal. Many of the local mines hurt by the strike said that losses would
reach the millions.
On the corporate front, an Indonesian official said today that Cemex still
intends to sell its existing 25.5% stake in state-owned Semen Gresik.
Argentine shares continued to rally today, with the Merval Index reaching a
second-consecutive all-time record high, breaking through the 1,800 point
level. Steel pipemaker Tenaris continued to power higher on the day.
On the economic front, the national statistics agency Indec announced that the
consumer price index rose 0.4% in February from January and was up 11.5% from
a year ago.
In corporate reports, Spanish-Argentine firm Repsol YPF SA's chairman said the
firm had no interest in selling its Argentine YPF assets, contrary to local
newspaper speculation.
-- 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
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SOURCE Thomson Financial Corporate Group
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