Tuesday, May 23, 4:45 PM EDT (Thomson Financial): Latin American stocks
were mixed to lower, with Brazilian and Mexican shares sinking on continued
worries about rising interest rates in developed countries, such as the
U.S. Bucking the downtrend, however, Argentine issues managed solid gains.
Brazil's Bovespa Index tumbled 386.92 points, or 1.06%. Mexico's
benchmark Bolsa Index plunged 284.46 points, or 1.47%, while Argentina's
Merval Index jumped 26.46 points, or 1.66%.
Brazilian stocks dropped, extending recent losses, on continued
concerns about rising U.S. inflation and interest rates amid a jump in oil
prices today. Investors fear that recent signs of inflationary pressure
will lead the U.S. Federal Reserve to continue its tightening cycle longer
than expected, potentially diverting investment flows away from emerging
markets like Brazil.
In local news, mining giant Companhia Vale do Rio Doce said it reached
an agreement on 2006 iron ore price contracts with Arcelor. Under the
agreement, iron ore fines will be raised by 19%. CVRD reached a series of
similar price accords with other steelmakers last week.
Meanwhile, a major investment bank upgraded American Depositary Shares
in telecom carrier Tim Participacoes to "outperform" from "peer perform"
following a recent share price correction.
In other analyst actions, another investment bank reshuffled its Latin
America equities model portfolio, dropping Brazilian logistics firm ALL in
favor of airline Tam. The bank also cut Chilean fixed-line carrier CTC, and
raised its exposure to seamless steel pipemaker Tenaris, which is owned by
Techint.
Elsewhere, Mexican shares sank on continued uncertainty over the
outlook for U.S. interest rates. In local economic news, the Finance
Ministry said Mexico posted a US$464 million trade surplus in April as
exports rose 13.9% to US$19.80 billion, while imports grew just 7.3% to
US$19.33 billion.
On the corporate front, a major investment raised its price target for
bottler Femsa to US$122 on a "dramatically improved" outlook for Mexico's
domestic beer market.
Meanwhile, the bank also raised its recommendation on shares of
tortilla maker Gruma SA to "buy" from "neutral," citing valuation.
Broadcaster TV Azteca said it made cash distributions to shareholders
of US$68 million, or $0.02 per CPO share. The payout was part of the US$90
million approved for 2006 at shareholder meetings in February and April.
Argentine issues gained ground, bucking the region's downtrend, in a
quiet news day for the local market. Among the day's few headlines, an
influential investment bank raised its exposure to seamless steel pipemaker
Tenaris, saying the recent plunge in the company's shares has brought
"valuations to more attractive levels."
-- 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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