Wednesday, March 8, 4:45 PM EST (Thomson Financial): Latin American stocks
slumped again today amid ongoing concerns over rising U.S. Treasury yields.
Optimism about the outlook for Brazilian interest rates helped to limit
losses, however.
Brazil's Bovespa Index dropped 133.50 points, or 0.36%. Mexico's benchmark
Bolsa Index fell 152.25 points, or 0.82%, while Argentina's Merval Index shed
0.42 point, or 0.02%.
Brazilian stocks dropped for a third straight day on worries about rising
U.S. interest rates. The recent surge in U.S. Treasury yields has led many
foreign investors to reassess their exposure to Brazilian stocks, according to
news services. The increase in yields has been seen as reflecting expectations
of further U.S. interest-rate hikes to contain inflation. Higher U.S. rates
tend to divert investment flows away from emerging markets like Brazil.
Helping to limit the Bovespa's losses, investors were hopeful that
Brazil's central bank would announce an interest rate cut after the close of
trading. The bank was widely expected to cut its Selic interest rate by at
least 75 basis points to 16.5%. Moreover, some investors were betting on a
bigger cut of 100 basis points amid recent signs of easing inflation in
February.
In economic developments, Brazil's Applied Economics Research Institute
(Ipea) raised its 2006 current account view to US$6.5 billion from its
previous estimate of US$3.8 billion in December, following stronger-than-
expected exports in January. The Ipea noted that solid demand for Brazilian
commodities and a greater range of products shipped has helped to offset the
strengthening real's negative impact on Brazilian exports. The Ipea also
lowered its 2006 inflation estimate to 4.5% from 4.8%, in line with market
forecasts.
Elsewhere, Mexican shares were once again hit by selling pressure, falling
for the third-consecutive session. Investors continue to be concerned about
rising U.S. interest rates.
Wireless firm America Movil announced its intentions to pay a dividend of
0.10 peso a share. The dividend will be proposed to shareholders at a meeting
to be held before April 28.
In similar reports, soft-drink bottler Coca-Cola Femsa SA announced plans
to pay a dividend of 0.376 peso a share on June 15.
Within the airline group, Asur said that total passenger traffic tumbled
16.7% in February, compared to the year-earlier period. The firm said that
lower traffic figures to Cancun and Cozumel were the result of decreased
accommodation available in those areas as a result of Hurricane Wilma.
Argentine shares finished little changed on the day, as earnings season
winds to a close. Tomorrow, Telecom Argentina is scheduled to report its
financial results, one of the last major firms to do so this season.
Meanwhile, flat steelmaker Siderar SAIC said last night that its fourth-
quarter net profit fell to 233 million pesos from 487 million pesos a year
earlier. Net sales edged down to 1.07 billion pesos from 1.14 billion pesos.
For the full year, the firm's net profit slid to 1.2 billion pesos from 1.3
billion pesos in 2004. Siderar shares tumbled on the day.
Elsewhere, Banco Macro Bansud said that it intends to issue 61.6 million
Class B shares as part of a secondary public offering, in addition to its
previously announced issuance of 75 million new Class B shares.
-- 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
Financial, please visit our web site at http://www.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
back to top
