Latin American stock market roundup

By Bradley Brooks The Washington Times-UPI Business Correspondent

RIO DE JANEIRO, Brazil, June 5 (UPI) -- Stocks were generally up across Latin America this week with local news mostly moving markets.

The biggest driver in the short to medium term for Brazil -- the region's biggest economy -- will be the fate of badly needed reforms to the country's pension, tax and legal systems.

Foreign and domestic investors are closely watching whether President Luiz Inacio Lula da Silva has the strength to power the reforms through a dizzying array of parties in Congress.

Leaders from Lula's Workers' Party in the lower house of Congress said Wednesday they had the votes needed to push the pension reform bill through the Chamber of Deputies.

According to Lula's economic team, the pension reform they're proposing would save the country nearly $20 billion over the next 30 years.

The momentum to get reforms through Congress is being aided by the mandate that voters gave Lula in his overwhelming electoral win, and the support they are still sending his way.

On Wednesday, a poll gave the leader a 78 percent personal approval rating, despite his having made little economic headway in his first five months in office.

Optimism is building on the economy as well, with foreign investors being lured back to the country.

On Tuesday, Fitch Ratings upped Brazil's debt to "positive" from "stable."

That is a remarkable transition for a country that six months ago was thought to be heading toward the world's largest sovereign default, a distinction still held by neighboring Argentina.

"The performance of President Lula's administration since taking office on January 1, 2003, has been supportive of sovereign creditworthiness and has eased one of Latin America's most marked political transitions from the center-right to a coalition dominated by the left," Fitch reported in a statement.

Meanwhile, over in Argentina, investors continue to keep tabs on new President Nestor Kirchner, whose economic ideas remain murky at best.

On the corporate front, telecommunications giant Argentina Telecom said Wednesday it will only buy back $290 million of debt, about half of what it wanted to purchase before a debt restructuring plan was frowned on by investors.

On Wednesday, Telecom Argentina's shares dropped 3.8 percent in Buenos Aires.

The company -- majority owned by Telecom Italia and France Telecom -- defaulted on some $3 billion after Argentina's peso was devalued in January 2002.

Some analysts said the paltry buyback may hurt the company's shares in coming days. But others argue investors have priced the poor buyback showing into the company's stock already.

Telecom Argentina was arguably the corporation hurt most when Argentina defaulted on its debt in December 2001, and many investors are watching the company's progress, trying to gauge how the business climate in Argentina might pan out in coming years.

Investors are also keeping a close eye on Telecom Argentina as the government decides if the sector can begin hiking prices.

Telecoms and utilities in Argentina are suffering badly, after the devaluation knocked more than 60 percent off the peso's worth, while the companies are stuck holding debt in dollars.

As for the markets, Brazil's Bovespa stock index ended last Thursday up 0.83 percent at 13,405, its third straight winning session. Investors were generally cheered by chances for having reforms pushed through Congress. Long-distance carrier Embratel rose 6.3 percent.

The index ticked up to 13,422 Friday, wrapping up a May that saw a gain of 7 percent and adding on to the nearly 20-percent rise in the Bovespa since Jan. 1. Analysts say June should be another solid month for investors, with an expected interest-rate cut likely to spark market action.

Monday brought a 1.4 percent loss to 13,229 for the index, with a retreat on Wall Street weighing. Fixed-line phone company Telemar fell 3.4 percent as the government signaled changes in pricing policies for the sector could be upcoming.

The Bovespa rose nearly 1 percent to 13,350 Tuesday. Investors were cheered by a Fitch report raising Brazil's credit rating to positive from stable. Banco do Brasil gained nearly 5 percent.

On Wednesday the index gained 2.76 percent to 13,718. Oil giant Petrobras gained 3 percent after announcing a big oil find. Aircraft maker Embraer rose more than 4 percent, and Telemar added 4.3 percent.

In Mexico, the IPC index fell 0.3 percent to 6,648. Analysts said profit-taking was seen after recent gains. Shipping company TMM fell 15 percent as the outfit faces legal woes and concerns on its debt.

Friday brought a 0.77 percent gain to 6,699 for the index. Investors tracked nice gains on Wall Street. Fixed-line phone company Telmex added 1.7 percent.

The index rose to 6,722 Monday. Broadcaster Televisa gained 1.8 percent, while America Movil, Latin America's biggest wireless company, tacked on 1.6 percent.

On Tuesday the IPC ticked up to 6,739, with blue chips leading the day. Telmex gained 1.27 percent while the country's biggest retailer, Wal-Mart de Mexico, added 0.6 percent.

The IPC rose 2.24 percent Wednesday to 6,890. Industrial group Alfa gained 2 percent, Telmex added 3.5 percent, and America Movil rose 1.76 percent.

In Argentina, the Merval stock index closed Thursday down 0.54 percent at 674.3, as investors took profits. Losses were across the board. Telecom Argentina gained 2.8 percent, though, as investors approved of its efforts on restructuring debt.

On Friday, the index gained to 678.3 as investors were mostly sidelined, playing a wait-and-see with new president Kirchner's economic game plan.

The Merval hit a five-year high Monday, rising 3.6 percent to 702.8. Utilities and banks led the way, with the latter aided by a bill to restructure the sector being sent to Congress by Kirchner. Banco Frances gained 8.4 percent.

Tuesday saw a 0.7 percent gain to 707.8, with banks again leading the way. Banco Bansud gained 4.6 percent, while Grupo Financiero Galicia -- which controls the country's largest private bank -- added 1.1 percent.

The Merval slipped 0.85 percent Wednesday to end at 701.8. Steelmaker Acindar lost 2.85 percent and Telecom Argentina dropped 3.8 percent.

In Chile, the IPSA index gained 0.44 to 1,230 last Thursday, its highest mark this year. Investors were buoyed by the soon-to-be-signed free trade deal with the United States. Fertilizer maker SQM gained 2.1 percent.

Friday brought a flat session with the IPSA gaining 1 point.

On Monday, the index added 0.9 percent to 1,242. General optimism on Chile's economic direction buoyed investors. Retailers did well, with Falabella gaining 8.6 percent and Almacenes Paris tacking on 5.4 percent.

The inevitable profit taking took its toll Tuesday, with the IPSA easing to 1,240. Falabella lost 3.7 percent.

Wednesday saw a gain of 0.56 percent to 1,247 in uneventful trade.

In Venezuela, the IBC index continued to hit historic highs as tight capital controls prompted investors to dump available cash into the stock market.

Last Thursday, the index jumped 6.66 percent to end at 12,301, a new high. Telecom giant CANTV, which makes up 40 percent of the index, rose 8.3 percent.

On Friday, the IBC rose more than 4 percent to close at 12,800. CANTV rose 1.2 percent. The index gained a staggering 48 percent in May alone, as tight restrictions on the buying of dollars sent cash into blue chips.

The market was closed Monday for a holiday. Tuesday brought profit taking a loss of 0.8 percent to 12,692.

The IBC ended Wednesday down 0.6 percent at 12,616, with profit taking again to blame.