Latin American markets roundup

By Bradley Brooks <a href=www.upi.com>UPI Business Correspondent From the Business & Economics Desk Published 5/1/2003 8:14 AM

RIO DE JANEIRO, Brazil, May 1 (UPI) -- It was a mixed week for stocks across Latin America, as solid earnings reports and optimism in Brazil buoyed investors. But less-than-favorable election results in Argentina temporarily sent equities there down.

A Sunday vote in Argentina sent former President Carlos Menem and his fellow Peronist rival Nestor Kirchner into a second-round vote scheduled for May 18.

While investors like Menem's business-friendly talk, the corruption that was rather rampant during his 1989 to 1999 time in office does prompt some anxiety.

The center-left Kirchner is not viewed favorably by investors, who see him continuing many of President Eduardo Duhalde's big-government policies.

Some analysts don't envision either Menem or Kirchner as viable alternatives who can lead Argentina -- South America's second-biggest economy -- back to days of solid growth and tranquility.

"To date, neither candidate has laid out a coherent economic road map for Argentina in anything that I have seen directly or indirectly," said Edwin Truman, a senior fellow at the Institute for International Economics in Washington.

Not exactly the sort of analysis investors get excited with.

Truman laid out what he thinks are the important initial steps Argentina's next president should take to make the country once again an attractive place to do business.

"The first lesson of all governments is to take the bitter medicine early. The new government will have a lot to do," he said.

"They may not be the central issues for the Argentine people, but the rest of the world will be watching what is done to fix the busted banking system and to address the issue of public utilities."

Meanwhile, over in Brazil, Latin America's biggest economy, investors remained on a roll.

The government sold some $1 billion in bonds on Tuesday, marking Brazil's first entry back into the international market in more than one year.

That is not only a significant financial step, but a symbolic gesture of the renewed optimism that Brazil -- the eternal "country of the future" as the locals like to say -- may start coming into its own this year.

But, analysts warn, all that hinges upon the continued austerity of the center-left government of President Luiz Inacio Lula da Silva, and his pushing through much-needed reforms to Brazil's pension, tax and legal systems.

As for the markets, Brazil's Bovespa stock index finished last Thursday down 2.2 percent at 12,120. Profit taking was to blame, as equities rallied six percent in the previous five sessions. Long-distance carrier Embratel lost 5.8 percent. Jetmaker Embraer fell 1.79.

Friday brought a flat close at 12,126 for the index, profit taking again hurting the day. Banco Bradesco dropped 2.14 percent.

News of the $1 billion bond issuance pumped investors up Monday. The Bovespa rose 2.8 percent to 12,462, it highest point in 10 months. The trading day gained momentum late, especially after investors learned Brazil would use the new "collective action" clause in selling the new bonds, thus making them more manageable in a default or rescheduling situation. Fixed-line phone giant Telemar gained 4.7 percent. State-run oil company Petrobras rose 1 percent.

Tuesday brought a gain of 1.7 percent to 12,678 as the bond issuance went off without a hitch. Telemar added 3.55 percent, while cellular company Telemig gained 2.6 percent.

Wednesday brought a loss of 0.96 percent to 12,557 for the Bovespa. Bradesco shed 2.38 percent, while Embratel slipped 3.78 percent. Telemar lost 2.8 percent.

In Mexico, the IPC index ended Thursday flat at 6,379. Latin America's largest wireless company America Movil gained 3.96 after reporting solid earnings after the bell Wednesday. Fixed-line phone company Telmex, however, shed 2.16 percent.

Friday saw a loss of 0.7 percent to 6,333 for the IPC, mostly on profit taking. Broadcaster TV Azteca added 3.2 percent after reporting a nice increase in profits after the bell Thursday.

The IPC rose 1.5 percent to 6,428 Monday. TV Azteca led the day, gaining 5.4 percent as investors retained residual optimism from the earnings report.

Rival broadcaster Televisa gained 3.62 percent Monday, despite having its stock downgraded to neutral from overweight by JP Morgan. The company was set to release its earnings report the following day.

Tuesday brought a gain of 1.11 percent to 6,500 for the IPC. Industrial group Alfa climbed 4.32 percent after issuing a strong earnings report. Televisa added 1.78 percent.

The IPC ticked up to 6,510 Wednesday. Retailer Elektra fared well, adding 1.75 percent, while Wal-Mart de Mexico climbed 1.32 percent.

In Chile, the IPSA index ended Thursday up 0.58 percent at 1,110 on general optimism about the country's economic outlook. Steelmaker CAP gained more than 11 percent on hopes or rising steel prices.

Friday saw an absolutely flat close in weak trade. On Monday, the IPSA rose 0.46 percent to 1,115 on hopes for good earnings reports from corporations. Flagship airline LanChile gained 6.9 percent, electricity company Endesa added 1 percent.

Tuesday saw the IPSA jump more than 2 percent to 1,139. Investors were buoyed by domestic news, including an unemployment rate that fell 0.6 percent to 8.2 percent for the January to March period, compared to the same time the previous year. Endesa added 3.7 percent.

Wednesday brought a nice 2.21 percent gain to 1,164 for the IPSA. Supermarket D&S climbed 6.6 percent.

Argentina's Merval index finished Thursday down 2.74 percent at 651.7. Investors were antsy ahead of the Sunday election, and some profit taking was to blame as the index hit five-year highs earlier in the week.

On Friday, the index bounced back, gaining 2.2 percent to 665.97 in light trade. Analysts said investors were bullish on the possibility of having two market-friendly candidates making into the country's second-round vote.

Monday brought investors the news that only one of the business-friendly candidates -- Menem -- made it to the second-round vote, sparking a loss of 8.6 percent to 608.5 for the Merval. Banks were hit hard, with Grupo Financiero Galicia shedding 13.7 percent and Banco Frances losing 12.9 percent.

Yet the Merval came back on Tuesday, climbing 2.3 percent to 622.5. Banks recovered somewhat, with Frances rising 2.8 percent and Banco Bansud rising 2.5 percent. Telecom Argentina gained 5.3 percent.

On Wednesday, the Merval gained 2.16 percent to 635.9. Steelmaker Acindar gained 9.6 percent, Banco Frances added 2.77 percent, and Telecom Argentina rose 5.69 percent.

In Venezuela, the IBC finished Thursday slightly up at 8,434, then lost to 8,403 Friday. Monday brought another loss to 8,363, before gaining nicely Tuesday to 8,620.

On Wednesday, the IBC ended slightly down at 8,631. Copyright © 2001-2003 United Press International   View printer-friendly version     Copyright © 2001-2003, by United Press International. All rights reserved. This material may not be republished, rebroadcast, rewritten, redistributed, resold or manipulated in any form.