Latin American Market Roundup

By Bradley Brooks <a href=www.upi.com>UPI Business Correspondent From the Business & Economics Desk Published 4/3/2003 7:00 AM

RIO DE JANEIRO, Brazil, April 3 (UPI) -- Latin American stock markets were mostly down this week, though a Wednesday rally around the globe made things considerably cheerier.

As elsewhere, traders in Latin American are moving in response to every bit of news that comes from the coalition war in Iraq. If coalition forces become bogged down, stocks do the same. Wednesday's news from the war zone painted a brighter picture, with coalition forces seeming to make advances and coming ever closer to Baghdad.

Stock indexes across Latin American shot up accordingly.

In Brazil, Latin America's largest economy, investors went against global trends for much of the week, posting nice gains as the country's benchmark bond rallied and the currency gained steam against the dollar.

Sentiment was further buoyed in Brazil as it looked inevitable that the lower house of Congress was going to pass a bill that could lead to autonomy at the central bank.

While some analysts say this has already been priced into the market, or is discounted after government officials have said that such autonomy won't come until 2004, it is clear that traders thought it good news nonetheless.

Additionally, a new poll out Wednesday showed the approval rating for Brazil's leftist President Luiz Inacio Lula da Silva at 75 percent after three months, though the approval rating for the government as a whole stood at 49 percent.

International investors are hopeful that Lula can use his voter mandate and forceful personality to push through needed reforms to the country's financial, legal and pension systems. If those reforms come in a timely manner, analysts say, Brazil could see a new infusion of cash from emerging-market investors.

In Argentina, that country's antitrust body said Wednesday that it will delay a decision on allowing the sale of Argentine energy giant Perez Companc to Brazil's state-run oil company Petrobras. Officials said the decision may come in mid-April.

The deal, if completed, would be one of the largest in Latin America in the past year. It was last October that Petrobras said it was paying more than $1 billion for a 58.6 percent share of Perez Companc. The deal has taken on political undertones in Argentina, where even President Eduardo Duhalde recently said he had "doubts" about its legality. Officials are concerned about a Brazilian company having a monopoly in Argentina.

As for the markets, Brazil´s Bovespa stock index rose 0.2 percent to 11,233 last Thursday. Steelmakers gained after news that a World Trade Organization panel ruled U.S. steel tariffs illegal. Usiminas rose 5.7 percent on that ruling, while the world´s largest iron ore miner CVRD added 0.7 percent. Friday brought a gain of 1.5 percent to 11,396. Investors were cheered by a central bank report indicating a healthy budget surplus for February. Telecoms gained, as Telesp Celular added 6.2 percent and fixed-line phone company Telemar rose 1.7 percent.

The Bovespa lost 1.1 percent to 11,273 Monday as overseas doldrums caught up with investors. Telemar lost 2.6 percent and long-distance carrier Embratel fell 1.7 percent.

The index gained 2.8 percent to 11,592 Tuesday as the local currency gained nicely, spreading optimism into equities. Telemar soared 5.3 percent, as aircraft manufacturer Embraer gained 4.7 percent on news one of its key clients -- American Airlines -- might avoid bankruptcy. Wednesday brought a gain of 2.4 percent to 11,872, as investors followed Wall Street up on positive news from the war in Iraq. Utility Cemig gained 4.6 percent, Embratel added 5.9 percent, and Eletrobras gained 5.6 percent.

In Mexico, the IPC index ended last Thursday flat at 5,951, with worries about Iraq weighing. Wal-Mart de Mexico, or Walmex, closed up 1.7 percent, industrial group Alfa lost 1.4 percent.

On Friday, the index lost slightly to 5,947 as investors were sidelined by the military action in the Middle East. Fixed-line phone giant Telmex shed 0.5 percent, while retailer Elektra gained 1.7 percent. The IPC lost 0.6 percent to 5,914 Monday, tracking U.S. equities down. Alfa lost 3.2 percent, Walmex shed 1.8 percent. Telmex was a rare winner, gaining nearly 1 percent.

Tuesday saw a loss of 0.3 percent to 5,896, despite gains in the United States. Telmex lost 1.4 percent, while brewer Modelo gained 1.8 percent. The IPC gained 1.9 percent to 6,009 Wednesday with investors taking cues from Wall Street's gains. Telmex added 2.5 percent, America Movil gained more than 2 percent, and Walmex rose 2.34 percent.

Argentina´s Merval stock index edged up to 569 Thursday. Energy company Perez Companc gained 1 percent. Friday brought a loss of 0.5 percent to 566 for the index. Banks lost as the government lifted restrictions of withdrawls from certificates of deposit. Grupo Financiero Galicia -- which controls the country´s largest private bank -- lost 1.8 percent. Banco Frances fell 2 percent. Markets were closed Monday in Argentina for a national holiday.

On Tuesday, the index lost slightly to 565.9. Carmaker Renault lost 1.5 percent. The Merval was the only losing major index in Latin America Wednesday, as it stumbled 0.75 percent to 561.6. Banco Frances lost more than 3 percent, Perez Companc fell by 2.38 percent after its partial sell to Petrobras was delayed.

In Chile, the IPSA index lost 0.4 percent to 1,004 Thursday. Utility Enersis lost nearly 1 percent. Friday saw the index rise to 1,010. Enersis gained 3.6 percent while utility Endesa gained 0.3 percent. Monday brought a slight loss to 1,009 in quiet trade.

The IPSA lost 0.2 percent to 1,007 Tuesday as investors fretted over the war in Iraq. Enersis lost 1.7 percent. Wednesday brought a gain of 0.6 percent for the index, taking it to 1,013.

The IBC index in Venezuela lost 0.2 percent to 8,411 Thursday. The index gained 1 percent to 8,499 Friday. Monday saw the index up to 8,506. Nacional Telefonos de Venezuela, or CANTV, which comprises 40 percent of the index, lost 1.3 percent. Tuesday brought a gain to 8,570 for the IBC. CANTV gained 2 percent. On Wednesday, the index added 0.27 percent to 8,594.