Monday, May 22, 4:45 PM EDT (Thomson Financial): Latin American stocks
plunged alongside a broader tumble amid emerging markets, as investors
continue to ponder the future direction of U.S. interest rates. Continued
weakness in commodity prices also pressured Brazil and Mexico in
particular, as both countries are major commodities exporters.
Brazil's Bovespa Index tumbled 1,235.94 points, or 3.28%. Mexico's
benchmark Bolsa Index receded 812.85 points, or 4.03%, while Argentina's
Merval Index negated 64.78 points, or 3.91%.
Brazilian stocks plunged on the day, adding significantly to last
Friday's milder decline. Investors exited emerging markets, partly due to
U.S. interest rate concerns and steep falls in commodity prices.
On the economic front, the Ministry of Trade and Development said that
Brazil posted a US$433 million trade surplus in the third week of May,
brining the year-to-date surplus to US$14.822 billion.
Turning to corporate reports, local business daily Valor economico said
that airline TAM might buy planes from local manufacturer Embraer. A TAM
official commented that the firm has not yet made a decision. The airline
is in the market to replace its fleet of Fokker-100s.
State-run oil firm Petrobras will raise its oil output in 2007 by
560,000 barrels a day, according to Chief Executive Sergio Gabrielli.
Mining firm CVRD said late last Friday that it reached an agreement on
2006 iron ore price contracts with Mittal Steel, in which that firm agreed
to a 19% increase for iron ore fines. Elsewhere, Standard & Poor's Ratings
Services raised its long-term corporate credit rating on CVRD, and removed
the rating from CreditWatch. S&P said the firm's credit profile "is
strengthened by improved operating and financial conditions in its home
country Brazil, with positive implications particularly on its financial
flexibility."
Mexican shares followed Brazil deep into the red, as an exodus by
investors out of emerging markets pressured global markets. Investors had
little else to focus on amid a dearth of local economic and corporate
reports.
Argentina was also not able to escape the broader regional downturn,
despite an upgrade for a market heavyweight. A major investment bank raised
its rating for Tenaris to "buy" from "neutral" due to a recent decline in
the steel pipe maker's share price. Also, the investment bank noted that
Tenaris' earnings and outlook should continue to receive support from a
strong oil exploration up-cycle.
-- Linda.Shea@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
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SOURCE Thomson Financial Corporate Group
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