Monday, April 24, 4:45 PM EDT (Thomson Financial): Latin American
stocks were mixed, with Brazilian stocks dipping, in line with the U.S.
market, amid concerns about a recent surge in global oil prices. Meanwhile,
Mexican shares edged up amid tame local inflation data.
Brazil's Bovespa Index shed 23.29 points, or 0.06%, while Mexico's
benchmark Bolsa Index added 24.07 points, or 0.12%, and Argentina's Merval
Index jumped 24.34 points, or 1.27%.
Brazilian stocks were little changed, as concerns about the
inflationary impact of a recent spike in global oil prices weighed in
against continued optimism about the local economy and interest rates. Last
Friday, oil prices hit a fresh record high above US$75 a barrel amid
mounting tensions over Iran's nuclear program.
Adding to recent optimism about the local economy, the Brazilian
central bank's latest weekly market survey showed that analysts and
economists lowered their forecasts for 2006 inflation as measured by the
official IPCA index. It was the fourth consecutive week that the survey
showed declining inflation expectations. Meanwhile, analysts maintained
their year-end forecasts for gross domestic product and the benchmark Selic
interest rate.
In corporate news, a major investment bank raised its price target for
the shares of oil giant Petrobras to US$138 from US$125.
Meanwhile, another bank shuffled its model equity portfolio for Brazil,
adding airline Gol Linhas Aereas Inteligentes SA and wireless carrier Vivo
Participacoes SA. The bank also cut Banco Itau Holdings Financeira SA from
its focus list and replaced it with Banco do Brasil SA. As for Brazilian
equities overall, the bank reiterated its "overweight" recommendation,
saying, "External fundamentals remain strong, domestic economic
fundamentals are improving, political risk remains manageable, and local
participation in the equity market may increase as interest rates gradually
decline over 2006."
Long steel firm Gerdau SA said it expects iron-ore prices to rise
between 10% and 20% when contract negotiations are completed with global
iron-ore miners.
Mexican shares jumped on the session, hitting their fourth-consecutive
record. The Bank of Mexico took economists by surprise this past Friday
when it reduced the overnight lending rate by 25 basis points to 7%.
Meanwhile, Mexican retailers continued to benefit from Friday's positive
sales report for the month of February.
In today's economic headlines, the Bank of Mexico said that the
Consumer Price Index advanced 0.03% during the first two weeks of April,
below analyst expectations. The latest result reduced the annual rate to
3.37% from 3.41% at the end of March.
Turning to corporate earnings, home construction firm Geo posted a 25%
increase in its first-quarter net profits to 227.7 million pesos from 182.4
million pesos a year ago. Sales jumped 19% to 2.25 billion pesos, while
Ebitda advanced to 313.3 million pesos.
Meanwhile, ICA announced that it signed four construction contracts
totaling 1.32 billion pesos. The engineering and construction firm said the
projects' execution times range from six months to a little more than two
years.
Within the banking group, the International Finance Corp., the private
sector arm of the World Bank, said it may invest up to US$70 million in
Banco del Bajio for a 15% stake.
Argentine issues jumped alongside gains in Mexico. Standard & Poor's
Ratings Services upgraded the global foreign and local currency ratings on
the Republic of Argentina, and lifted its foreign and local currency
corporate credit ratings on several local entities.
-- 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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