Monday, April 3, 4:45 PM EDT (Thomson Financial): Latin American stocks
advanced, with Brazilian stocks posting the biggest gains on a continued
positive outlook for the local economy. Meanwhile, Mexican shares were boosted
by a flurry of merger activity on both sides of the border.
Brazil's Bovespa Index surged 765.10 points, or 2.02%. Mexico's benchmark
Bolsa Index climbed 361.58 points, or 1.88%, while Argentina's Merval Index
shed 1.89 points, or 0.10%.
Brazilian stocks rallied, as investors were heartened by an improved local
inflation outlook. Economists polled in the central bank's latest weekly
market survey said they expect IPCA consumer price inflation to come in
exactly on target at 4.5% this year, down from forecasts of 4.57% seen last
week. Economists also predicted that the country's reference Selic rate will
fall to 14.13% through the end of the year, down from previous estimates of
14.25%. The Selic rate currently stands at 16.5% annually.
Adding to positive sentiment, Brazil posted a $3.681 billion trade surplus in
March, up from a US$3.343 billion surplus a year earlier, the Ministry of
Development, Industry and Foreign Trade said. Exports during March totaled
US$11.367 billion and imports totaled US$7.686 billion. That compared with
US$9.251 billion in exports and US$5.908 billion in imports a year earlier.
Lending additional support to the market, concerns about the direction of the
government's economic policy continued to recede. Recently appointed finance
minister Guido Mantega said today that the government's commitment to tight
2006 fiscal austerity targets is "sacred." In recent days, Mantega has
expressed support for the policies of his market-friendly predecessor Antonio
Palocci, who stepped down amid repeated corruption allegations.
In corporate news, airline manufacturer Embraer said it plans to increase
investment to US$290 million during 2006. During 2005, the company invested
the equivalent of $249 million at the current exchange rate. "We have been
launching a number of key new planes in the last couple of years and continue
to invest in improving our products," Embraer said.
Separately, Embraer reported on Saturday net fourth-quarter earnings of 205.2
million reais, down from 307.3 million reais a year earlier due largely to the
appreciation of the Brazilian real.
Oil giant Petrobras said its petrochemicals unit, Petroquisa, decided not to
use an option to boost its stake in petrochemicals firm Braskem. The company
had until Friday to raise its stake in Braskem to 30% from
10%. An investment bank today downgraded Braskem to "sell" from "neutral"
after Petroquisa's decision.
In other research news, a major investment bank upgraded cosmetics maker
Natura Cosmeticos SA to "buy" from "neutral" on earnings growth. Meanwhile,
another firm downgraded long steel giant Gerdau to "peer perform" from
"outperform," due to valuation.
Mexican issues rallied today, as merger fever took hold on both sides of the
border. Mexican stocks leapt to a fresh record high, with the IPC Index up
nearly 2% on the day. Mining firms also benefited from advancing metal prices.
Topping headlines, wireless phone company America Movil agreed to purchase
South American and Caribbean assets from Verizon. The firm formed a joint-
venture with Telmex to buy Verizon's 28.5% stake in Venezuela's CANTV for
US$676.6 million. America Movil also agreed to buy Verizon Dominicana for
US$2.06 billion and a 52% stake in PRT for US$939 million.
In other deal news, Libbey Inc., a glass tableware maker, agreed to buy Vitro
de C.V.'s 51% stake in Vitrocrisa Holdings and related firms for US$80
million. Libbey now owns 100% of the firm.
Elsewhere, National Mining and Metal Workers Union members went on strike
today in the Pacific port of Lazaro Cardenas, effecting mills owned by
Monterrey-based Grupo Villacero and the Mexican unit of Mittal Steel.
Argentine shares barely budged today, as investors chose to ignore the broader
regional market rally. Investors are awaiting economic data in the form of the
consumer price index for March.
On the corporate front, France's Suez SA said that is considering selling its
controlling stake in Argentina's Aguas Cordobesas.
-- 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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