Thursday, June 22, 2006, 4:45 PM EST (Thomson Financial): Latin
American stocks were mixed, with Brazilian shares in a slump, Mexico
slightly higher and Argentine shares flat, as investors await clues about
the prospects for interest rates following next week's Federal Reserve's
FOMC policy meeting.
Brazil's Bovespa Index rose declined 229.87 points, or 0.67%. Mexico's
benchmark Bolsa Index edged up 32.19 points, or 0.18%, while Argentina's
Merval Index receded 1.67 points, or 0.11%.
Brazilian stocks fell today as investors took part in some profit
taking following yesterday's surge. Meanwhile, trading was cut short by the
Brazilian national team's game versus Japan at the World Cup.
In economic news, the Getulio Vargas Foundation reported that the
country's General Price Index, or IGP-M, advanced 0.56% in the 10 days
through June 20, compared with a rise of 0.34% for the same period last
month. The latest results were in line with analyst expectations.
On the corporate front, mining giant Companhia Vale do Rio Doce
advanced. Late Wednesday, the company said it had reached a deal with
Chinese steelmakers to raise iron ore prices by 19% in 2006 contracts. The
firm also announced a share buyback program in which the firm will buy up
to 5% of its outstanding preferred shares.
Airline stocks also fell across the board, with low-cost carrier Gol
and rival TAM, the country's largest airline, sinking by the close. The
companies' shares decreased on reports that Gol and TAM may not benefit as
much as expected from the demise of flagship airline Viacao Aerea
Rio-Grandense, or Varig. The government may favor smaller rivals in the
awarding of Varig's old routes to increase competition, while the two
airlines' costs will likely rise as they take on passengers stranded by
Varig's possible liquidation.
Meanwhile, Brazilian grocer Companhia Brasileira de Distribuicao, or
CBD, the country's largest supermarket chain, surged after a major
investment bank upgraded the company's shares to "Buy 2" from "Neutral 2."
The brokerage said the "worst" of the company's recent sales woes was
already priced into the shares.
Elsewhere, Mexican stocks edged higher, bucking the broader negative
trend elsewhere in Latin America and the U.S. In economic headlines, the
Bank of Mexico announced that the Consumer Price Index rose 0.07% in the
first half of June, less than what analysts has expected. Still, the annual
rate moved back up to about 3.27% from 3% at the end of May.
In a report, a large investment bank said it was adopting a defensive
position in Mexican shares on the possibility of leftist Andres Manuel
Lopez Obrador of the Democratic Revolution Party, or PRD, winning the July
2 presidential election. Separately, the bank said it switched out of
homebuilder Urbi in favor of Wal-Mart de Mexico, the country's biggest
retailer.
Argentine stocks were little changed amid thin trading as investors
mainly stuck to the sidelines. The benchmark Merval Index ended lower,
while the broader General Index rose slightly. Volume remained relatively
low.
In economic news, the National Statistics Agency, or Indec, said that
the current account surplus arrived at US$1.179 billion, up from US$185
million in the first quarter of 2005.
-- Michael.O'Brien@contractor.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
Financial, please visit our web site at http://www.thomsonfinancial.com.
SOURCE Thomson Financial Corporate Group
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