Monday, April 17, 4:45 PM EDT (Thomson Financial): Latin American
stocks posted robust gains, with Brazilian shares getting a boost from a
local telecom giant's share restructuring plan and optimism about inflation
and interest rates. Meanwhile, Mexico's bolsa climbed on expectations for
positive first-quarter earnings.
Brazil's Bovespa Index rose 380.35 points, or 1.00%. Mexico's benchmark
Bolsa Index gained 282.59 points, or 1.46%, while Argentina's Merval Index
leapt 48.36 points, or 2.61%.
Brazilian stocks gained ground, as investors were cheered by news that
fixed line telecom titan Tele Norte Leste Participacoes (Telemar) plans to
decentralize its share structure and migrate shares to Brazil's investor-
friendly Novo Mercado. The company said that as part of the share
restructuring, current holders of the controlling block of voting shares in
the company will sell their shares to the market, in a move that will help
ensure widespread ownership by the general public and effectively
decentralize control of the company. All of Telemar's shares will be
converted into common shares.
Lending additional support to the market, economists and analysts
polled in the Brazilian central bank's latest weekly market survey reduced
their 2006 inflation forecasts for the third consecutive week, bolstering
hopes that the bank will extend its run of interest-rate cuts at its
meeting on Wednesday. Analysts reduced their forecast for year-end 2006
IPCA inflation to 4.43% from 4.47% last week. Meanwhile, they maintained
their year-end 2006 forecast for the benchmark Selic interest rate at 14%.
The bank is widely expected to lower rates by 75 basis points at its
meeting Wednesday.
In other news, steelmaker CSN was in focus after local news services
reported that the company's shareholders will discuss the possible
acquisition of can maker Prada at an April 28 meeting.
Meanwhile, oil giant Petrobras said its petrochemicals unit,
Petroquisa, and Citiene, a local textile company, will invest about US$490
million to build a new petrochemical factory in Pernambuco state in the
Brazilian northeast.
In broker action, a major firm raised its 12-month price target for the
shares of paper and pulp producer Aracruz to US$69 from US$52.60, citing
"an improved outlook for pulp prices."
Elsewhere, Mexican shares jumped amid optimism about the first-quarter
earnings season, which mostly takes place this week and next. Reporting
today, Banamex, a unit of Citigroup, said its first-quarter net profit rose
to US$444 million from US$373 million last year, helped by strong consumer
loan growth. Revenues grew 19% to US$1.37 billion.
On the political front, a poll published today by El Universal
newspaper showed that the leading candidate in Mexico's presidential race,
Andres Manuel Lopez Obrador of the left-wing Democratic Revolutionary
Party, narrowed his lead to 38% of preferences among probable voters in
early April, down from 42% in March. Felipe Calderon of the ruling National
Action Party rose to 34% from 32% in March, and Roberto Madrazo of the
Institutional Revolutionary Party rose to 25% from 24%.
Argentine issues rallied, following the rest of the region's move
higher. In economic data, Argentine consumer confidence sank 9.75% to 54.02
in April from a record 59.9 the previous month in Torcuato Di Tella
University's survey of consumers. Confidence had surged 6.5% in March.
-- 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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