Friday, June 9, 2006, 4:45 PM EST (Thomson Financial): After starting
the day higher, Latin American markets slid into the red. Stocks have seen
a week of heavy selling as investors trimmed their emerging-market holdings
on uncertainty regarding U.S. interest rates and the global economy.
Brazil's Bovespa Index lost 363.15 points, or 1.02%. Mexico's benchmark
Bolsa Index was down 508.90 points, or 2.79%, while Argentina's Merval
Index dumped 20.90 points, or 1.30%.
In Brazil, shares continued their decline on investor concerns about
the U.S. Federal Reserve continuing its rate-hiking cycle, which has
sparked a retreat from emerging markets like Brazil. Volatile oil prices,
which analysts consider a factor for both overseas inflation and local
economic activity, have also continued to pressure shares.
In Brazilian political news, President Luiz Inacio Lula da Silva said
Brazil will continue its fiscal austerity policies despite election-year
pressures for more spending. Lula made the comments at an event at the
BNDES National Development Bank in Rio de Janeiro, according to the Estado
news agency. "There won't be any action on my part, no gesture, that will
put economic stability and the seriousness of tough fiscal policy at risk
because of the elections," Lula said.
On the economic front, the Brazilian Federal Treasury announced it has
repurchased a total of US$1.1 billion in U.S. dollar- and euro-denominated
bonds through a cash tender offer; the bonds have 20 different maturities
ranging from October 2007 to March 2030. Brazilian Treasury Secretary
Carlos Kawall said that the total figure was "below what we expected." The
repurchase was made via a cash tender offer that occurred June 5-8. The
offer was for a total of up to US$4 billion in bonds.
In Mexico, the market's key IPC index was down again as the emerging-
markets correction of the past month pulls the index down from a
record-high May 9 close of 21,823 points. Bank of Mexico Governor Guillermo
Ortiz on Thursday attributed the volatility hitting Mexican markets to
external factors as opposed to concerns about next month's presidential
elections.
Mexico's largest retailer Wal-Mart de Mexico's shares ended the session
higher; the company reported late Thursday that its same-store sales grew
5.1% in May from the year-ago month, while total sales were up 15%.
In corporate news, Standard & Poor's said it affirmed its long-term
financial strength and counterparty credit ratings of 'A-' on Mexican
company ING Comercial America Seguros S.A. de C.V. "The ratings are based
on Standard & Poor's group methodology, in which INGCA is considered a
strategically important subsidiary to its ultimate parent, ING GROEP N.V.,
and are supported by strong capital levels," said Standard & Poor's credit
analyst Alfonso J. Novelo.
Argentina's Merval Index ended lower, and locally traded Argentine
bonds recovered modestly Friday from the selling of prior days and the
Argentine peso gained slightly, but very thin volumes betrayed the
continued cautious sentiment of investors.
In energy, shareholders of power distributor Edenor have approved a new
stock issuance to increase capital by up to ARS83.2 million (US$27
million), the company reported. Edenor shareholders also approved a plan to
list ADRs in New York, according to a summary of a Wednesday meeting filed
with the Buenos Aires Stock Exchange. Edenor is controlled by rising
Argentine energy player Marcelo Mindlin's Grupo Dolphin investment fund.
Grupo Dolphin bought the controlling stake last year from Electricite de
France SA.
--Michael.O'Brien@contractor.Thomson.com
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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