Latin American market roundup

December 25, 2002

     RIO DE JANEIRO, Brazil, Dec. 25 (UPI) -- Stocks were mostly up across Latin America in this abbreviated holiday week of trading. In Brazil, soothing moderate statements emanated from the president-elect, while Argentina saw fresh hopes for multilateral aid.      Brazil's President-elect Luiz Inacio Lula da Silva completed his Cabinet this week, with appointments spread throughout the myriad political parties in the country. This, coupled with repeated statements from the future minister of finance and central bank president in regard to fighting inflation, keeping spending in check and continuing debt payments, has cheered investors.      Brazil's currency -- the real -- has gained about 8 percent since mid-December, further bolstering the market. Investors, while aware that Lula -- as the president elect is known -- has much to prove once he takes office on Jan. 1, are nevertheless confident that the worst of the country's economic turbulence is behind it.      The biggest worry for investors in Brazil has been the country's massive $230 billion debt, much of which is linked to floating interest rates and the dollar. Fears of an imminent default have lessened -- though by no means dissipated -- as currency gains alleviate the debt burden, or at least slow its growth somewhat.      Markets in the country have so far given a vote of confidence to Lula. Since his Oct. 27 election, the main stock index is up 15 percent, the currency has added 6.2 percent and the benchmark bond due in 2014 grew 17 percent.      Over in Argentina, investors were relieved by word from the International Monetary Fund that a transitional aid package may be on the way. The country has been negotiating for more than a year to have aid resumed.      A statement from the U.S. Treasury lending support to the idea of a temporary aid package to see Argentina through elections next April helped the market move upward. The statement noted that an agreement was expected sometime in January.      But the Clarin newspaper reported Tuesday that Argentina will have to weaken its foreign exchange controls if it hopes to the new IMF aid. The government imposed limits on how much money individuals and corporations alike can send abroad in an effort to bolster foreign reserves.      The IMF wants companies to have the freedom to send money outside of Argentina in order to service their debts. While a seemingly reasonable request, the issues is a politically sticky one with Argentine lawmakers.      The biggest corporate news of the week came as Mexico's Coca-Cola Femsa bought Panamerican Beverages, Latin America's largest soft-drink bottler, in a $3.6 billion deal.      Coca-Cola Co. in Atlanta owns 30 percent of Coca-Cola Femsa.      The new company, which will operate under the Coca-Cola Femsa name, will become the world's No. 2 bottler of Coke products, and its biggest bottler outside of the United States.      The move significantly bolsters Coca-Cola's distribution network in Latin America, where its sales have slumped of late. The buy also gives it a stronger presence in the key Latin American markets of Brazil, Mexico, Argentina and Venezuela, as well as some Central American countries.      As for the markets, Brazil's Bovespa stock index ended last Thursday up 2 percent at 11,207. The local currency had gained more than 6 percent since the beginning of the week, cheering investors.      Friday brought a healthy 2.5 percent jump to 11,207 for the index. Investors were bullish on comments from the Lula camp about fighting inflation. Fixed-line phone company Telemar gained 2.3 percent, while oil company Petrobras added 3.2 percent.      On Monday the Bovespa lost 0.2 percent to close at 11,470. The country's largest private bank -- Bradesco -- lost 2.5 percent. The Bovespa was shuttered on Tuesday as well as for Christmas on Wednesday.      In Mexico, the IPC index ended last Thursday 0.5 percent up at 6,120, shrugging off losses on Wall Street. The index then rose Friday to 6,131. Wireless operator America Movil added 2.1 percent.      Monday brought a gain of 0.4 percent to 6,153 for the IPC. Bottler Coca-Cola Femsa, though, lost 3.8 percent after it announced plans to purchase Miami-based Panamerican Beverages. On Tuesday, the IPC lost 0.3 percent to end at 6,151. Coca-Cola Femsa gained back slightly, rising 3.17 percent. But retailers were hit hard, as sluggish sales soured investors. Elektra lost 3.5 percent. The market was closed Wednesday.      Argentina's Merval index rose 1.74 percent to 496 last Thursday on hopes for new IMF aid. On Friday, the one-year anniversary of the resignation of former President Fernando de la Rua, the index gained 1.57 percent to 503.9.      Monday saw the Merval rise 3.35 percent to 520.8 after the late Friday announcement that the IMF was considering a transitional aid package. The index then added 0.5 percent to 523.9 on Tuesday, with utilities gaining nicely. Electricity company Central Puerto added 4 percent, while oil company Perez Companc gained 0.9 percent. The Merval was closed Wednesday.      In Chile, the IPSA index rose 1.2 percent to 85.05 Thursday. The index then dropped to 84.92 Friday. Monday saw a gain of 0.2 percent to 85.15, while Tuesday brought a loss of 1.11 percent to 84.19.      Venezuela's markets were closed for the week as a general strike paralyzed the country. The markets last traded on Nov. 29. Protesters are seeking the ouster of President Hugo Chavez, blaming him for the economic woes of the country.