Wednesday, March 29, 4:45 PM EST (Thomson Financial): Latin American
stocks gained ground, as investors bought discounted shares following
yesterday's sell-off on worries the U.S. monetary tightening cycle may last
longer than expected.
Brazil's Bovespa Index jumped 809.36 points, or 2.21%. Mexico's benchmark
Bolsa Index climbed 202.36 points, or 1.07%, while Argentina's Merval Index
added 7.61 points, or 0.42%.
Brazilian stocks posted robust gains, as investors went in search of bargains
following yesterday's sell-off on a finance ministry shakeup and indications
from the U.S. Federal Reserve that more interest-rate hikes are on tap. The
Fed hiked rates by 25 basis points and said lingering risks to inflation may
necessitate further tightening, disappointing some investors who had hoped the
Fed would signal an end to its hiking cycle. Higher U.S. interest rates tend
to divert investment flows away from emerging markets like Brazil.
Meanwhile, reassuring comments from newly appointed Finance Minister Guido
Mantega helped to ease concerns that he might abandon the fiscal austerity
policies of his predecessor, Antonio Palocci. In comments made earlier this
week, Mantega indicated that local interest rates would continue to come down
from their sky-high levels and that the pace of reductions might even
accelerate.
Helping to ease concerns that recent corruption allegations would ensnare
President Luis Inacio Lula da Silva, an investigation into an alleged bribery
network among members of Brazil's Congress found today that Lula was not
responsible for the illicit actions of subordinates and political allies in
the scheme. "Responsibility cannot lie with the president simply for occupying
the top of the power structure of the executive branch, which would mean
holding him responsible independently of his awareness of the activity or
not," the investigative committee report said. The report also recommended the
indictment of 18 members of congress linked to the scandal.
In corporate news, steel maker CSN said the company is not for sale and is
seeking acquisitions. The statement followed market speculation earlier this
week that Mittal Steel and Arcelor were trying to buy CSN.
Telecom giant Telemar completed today the sale of non-convertible debentures
worth 2.16 billion reais, the largest debenture sale ever in Brazil for a non-
financial company.
A major investment bank raised its 2006 and 2007 earnings estimate for U.S.-
listed shares of Brazil's state-run oil firm Petrobras, citing modestly higher
oil prices in 2006, and somewhat stronger foreign exchange assumptions.
Separately, Petrobras said yesterday that its executive board has approved the
location for a new petrochemicals refinery that will require an initial
investment of US$3.5 billion.
Elsewhere, Mexican shares advanced after retreating the past two days amid
expectations of further U.S. interest-rate increases. Media shares were active
after a Senate committee yesterday voted narrowly in favor of a new radio and
television law that is expected to benefit Televisa and TV Azteca, as
broadcast signals are switched to digital from analog. A vote by the full
Senate is expected tomorrow.
Also, copper miner Grupo Mexico was in focus, as a strike at the company's La
Caridad mine entered its sixth day today.
Argentine issues edged higher, helped by strength in shares of Banco Macro
Bansud, following the recent debut of its American Depositary Receipts in New
York. Steel shares also managed solid gains.
In economic news, Argentine supermarket sales rose 0.3% in February from
January and were up 6.7% on the year, while shopping center sales dipped 0.6%
on the month and rose 17.4% on the year.
-- 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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