Tuesday, March 14, 4:45 PM EST (Thomson Financial): Latin American stocks
posted solid gains, with Brazilian shares getting a boost from reports that
Brazil's main opposition party has likely picked a market-friendly candidate
to run in October's presidential race. Meanwhile, Mexico's bolsa followed the
U.S. market higher.
Brazil's Bovespa Index leapt 748.51 points, or 2.03%. Mexico's benchmark
Bolsa Index climbed 234.85 points, or 1.26%, while Argentina's Merval Index
added 7.27 points, or 0.41%.
Brazilian stocks surged amid indications that the main opposition party
has chosen a market-friendly candidate to run in the 2006 presidential
election. The Social Democratic Party (PSDB) has chosen Sao Paulo Governor
Geraldo Alckmin as its 2006 presidential candidate, news services reported,
citing a top party official. A formal announcement by the party committee is
expected later today. Alckmin, which is currently governor of Sao Paulo,
reportedly beat out Jose Serra, mayor of Sao Paulo, for the party nomination.
As such, Alckmin is expected to go up against President Luiz Inacio Lula da
Silva in the October elections. Alckmin has said he endorses the austere
fiscal and monetary policies pursued by former President Cardoso and continued
by Lula.
Lending additional support to Brazilian shares, data released today showed
that U.S. retail sales fell more than expected in February, helping to ease
worries that the U.S. Federal Reserve will be forced to speed up its pace of
raising interest rates to cool down the economy and contain inflation.
In local economic news, the Sao Paulo Federation of Industries reported
that industrial employment in Sao Paulo state rose 0.12% in February from
January.
On the corporate front, Petrobras said yesterday that it will propose to
shareholders a US $7.035 billion capital increase at a meeting April 3. The
increase will be obtained from an incorporation of a part of the company's
retained profits rather than from the issuance of new shares.
Mexican shares rallied on the day, alongside strong U.S. market trading.
U.S. shares rallied on very strong corporate results from Goldman Sachs, while
economic reports were more downbeat, tempering interest-rate hike concerns.
Within the telecom group, the Federal Telecommunications Commission, or
Cofetel, said that activity within its telecommunications production index
expanded 18.5% in the fourth quarter of 2005, compared to the corresponding
period a year ago. Meanwhile, the rate slowed from the third quarter's 26.5%
year-over-year growth rate.
Argentina's shares followed the broader regional market higher. The
central bank announced last night an increase in the bank's minimum reserve
requirements for savings and checking deposits and ended the practice of
paying interest on those funds. As a result, liquidity conditions will be
tightened, which may encourage longer-term saving and lending.
On the corporate front, oil firm Petrobras Energia said that two of the
National Securities Commission's accounting law changes will lead to a
reduction in the firm's net assets of about 800 million pesos. That firm's
stock tumbled on the day.
Spanish-Argentine firm Repsol YPF announced that it may acquire a 21%
stake in a liquefied natural gas joint venture that is led by Russia's OAO
Gazprom.
-- 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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