Wednesday, April 19, 4:45 PM EDT (Thomson Financial): Latin American
stocks were mixed to higher, with Brazilian shares gaining on benign local
inflation data, while continued optimism about the first-quarter earnings
season boosted Mexican issues. Profit taking dragged Argentine shares
lower.
Brazil's Bovespa Index jumped 365.27 points, or 0.92%, while Mexico's
benchmark Bolsa Index added 113.02 points, or 0.57%, and Argentina's Merval
Index fell 11.90 points, or 0.61%.
Brazilian stocks rose strongly for a third straight day, as tame
inflation data added to optimism about the local interest-rate outlook. The
Fipe research foundation said its Sao Paulo consumer price index dropped
0.06% in the four weeks ended April 15, compared with a rise of 0.03% in
the four weeks ended April 7. Given recent signs that Brazilian inflation
is under control, investors largely expect the central bank to announce an
interest-rate cut of 75 basis points after today's market close. It would
be the bank's seventh rate reduction in as many months.
In other economic data, Brazilian retail sales volume dropped a
seasonally adjusted 4.13% in February from January, the Brazilian Census
Bureau reported. In January, retail sales volume had risen 4.12%.
On the corporate front, a major brokerage upgraded Brazil's two biggest
banks Banco do Brasil SA and Bradesco SA to "outperform" from "peer
perform," saying "a recent sell-off creates a buying opportunity."
Also, two major airlines received broker upgrades as well. Both TAM and
Gol saw their shares upgraded to "buy," due to good industry prospects, an
expanding Brazilian economy and difficulties faced by flag carrier Varig.
Fixed-line phone company Telemar was in focus after the Brazilian
Securities and Exchange Commission said it will investigate the company's
share restructuring deal after its shares surged ahead of the deal
announcement last week.
Elsewhere, Mexican shares climbed for a third straight day reaching
another record close. Shares have been supported in part by hopes for a
strong first-quarter earnings season. A number of companies are due to
report this week and next, with cement giant Cemex's results due out early
tomorrow. The company is expected to report solid earnings growth.
In other developments, retail association Antad said today that total
sales at member establishments rose 9.8% in March, while same-store sales
edged up 0.4% from the year-earlier month. Sales at self-service stores
rose 5% year-on-year, while same-store sales dropped 2%.
Argentine issues dipped as investors took profits following yesterday's
strong gains. In economic news, Argentina posted a primary surplus of 1.404
billion pesos in March, up 13.7% from March 2005. Meanwhile, manufacturing
activity climbed 7.2% in March from a year earlier and added 0.4% from
February. The year-on-year increase was down from February's growth rate of
8.6%.
-- 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
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SOURCE Thomson Financial Corporate Group
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