Monday, March 6, 4:45 PM EST (Thomson Financial): Latin American stocks
fell, with Brazilian shares falling on profit taking following recent gains on
last week's news of a credit rating upgrade. Meanwhile, weakness on Wall
Street amid rising bond yields weighed on Mexico's bolsa.
Brazil's Bovespa Index tumbled 885.77 points, or 2.26%. Mexico's benchmark
Bolsa Index dropped 197.79 points, or 1.03%, while Argentina's Merval Index
dipped 7.76 points, or 0.43%.
Brazilian stocks sank, as investors took some profits after the market
reached a record high last week on 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 market may have also been pressured today by investor caution ahead of
the central bank's monetary policy meeting on Wednesday. The bank is widely
expected to extend its string of interest rate cuts amid recent indications of
tame inflation. Analysts largely expect a cut of at least 75 basis points from
the current lofty level of 17.25%. Moreover, some are anticipating an even
deeper cut after a local news report over the weekend suggested the central
bank is under greater pressure from the government to accelerate its easing
cycle following sluggish economic growth results in the fourth quarter.
Fueling optimism about the outlook for interest rates, the Fipe research
foundation reported today that its Sao Paulo consumer price index fell 0.03%
in February, compared with an increase of 0.5% in January. The February
inflation figure was in line with forecasts.
In corporate news, local media reported that Braskem and oil major
Petrobras are in talks over a US$350 million petrochemical plant in
northeastern Bahia state. The unit would have a capacity to produce 500,000
tons per year of
terephthalic acid.
Separately, Petrobras said it will start trading its shares at the Buenos
Aires stock exchange in the coming days Petrobras shares currently trade in
Sao Paulo, New York and Madrid. The oil giant is scheduled to hold a
presentation at the Buenos Aires exchange on Friday.
Meanwhile, Mexican shares dropped in line with the U.S. market amid
concerns about rising U.S. bond yields. The weakness on Wall Street eroded
positive sentiment generated by M&A activity in the local telecom sector.
Venezuelan press reports named both Telmex and America Movil as potential
acquirers for a stake in Venezuela's CA Nacional de Telefonos de Venezuela
(CANTV). Telmex is also seen as a likely bidder for a controlling stake in
Colombia Telecomunicaciones SA.
In other news, media firm Grupo Televisa SA said it would invest $20
million to install and run a new in-store television advertising system in
Wal-Mart de Mexico stores.
Elsewhere, Argentine issues retreated after advancing strongly last week
on earnings optimism generated by positive financial results from the likes of
steel pipe maker Tenaris. Investors are also looking ahead to further earnings
reports this week from Telecom Argentina and steel company Siderar.
Bucking the market's downtrend today, Banco Macro Bansud climbed on news
of its approaching ADR launch of around 150 million shares. Shares were also
supported by expectations the company will report upbeat fourth-quarter
earnings results.
-- 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 Thomson
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SOURCE Thomson Financial Corporate Group
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