Friday, June 20, 2003
(06-20) 14:59 PDT MEXICO CITY (<a href=www.sfgate.com>AP) --

Mexican stocks closed flat to lower Friday, pressured my modest losses in the liquid shares of wireless phone carrier America Movil.

The market's key IPC index closed down 3.3 points, or 0.1 percent, to 7080.69 points, ending the week with a gain of 96 points. At the end of 2002, the IPC stood at 6127.09.

Volume was a light 79 million shares worth 685.2 million pesos, compared with Thursday's also thin 72.3 million shares worth 778.1 million pesos. Volume in the past two sessions has been well below the average turnover of 1.3 billion pesos so far this month. SAO PAULO, Brazil (AP) -- SAO PAULO (Dow Jones)--After being closed for the Corpus Christi holiday Thursday, Brazil's stock market saw a sell-off Friday as the local investors reacted to declines on overseas exchanges the previous day and talk that the country's development bank, the BNDES, could sell shares of local companies from its portfolio.

The main Ibovespa index ended Friday's session at 13,130, down 2.8 percent from Wednesday's close at 13,510 points. Trading volume was moderate with 587 million reals exchanging hands.

Investors reacted negatively to Thursday's declines on the New York indices, selling off shares early and continuing the trend throughout the day.

The market was also spooked by a looming congressional inquiry into allegedly irregular overseas remittances of US$30 billion. Investors fear the inquiry could hamper efforts at reforming the nation's money-bleeding social security program and unwieldy tax system. Some analysts believe the current profile of Brazil's pension and tax regimes contribute to the nation's risk profile.

Share prices also moved on word that the national development bank, or BNDES, may sell shares from its portfolio to boost its financial position in the wake of defaulted loan payments by U.S. power group AES Corp. BUENOS AIRES, Argentina (AP) -- Argentina's large-cap Merval Index broke through the 800-mark for the first time in five years Friday, as investors took heart from International Monetary Fund approval of the second review of January's debt rollover accord.

At the close of Friday's session, the Merval had picked up 18.26 points, or 2.3 percent, to close at 801.17 points. The broader General Index registered more tempered gains and was up 600.38 points, or 1.76 percent, at 34,556.80 points.

Trading volume reached a strong 111.4 million, as heavy buying pushed the Merval up by more than 3 percent at several points during the day.

Analysts said the latest day of rises was the result of a combination of general optimism about the economy and IMF approval of the second review. That approval opens the way for negotiations on a new, long-term debt rollover accord, the IMF has previously indicated.

"With this news, there is just a general feeling that the business climate of the country is improving," said Rafael Ber, senior analyst at Argentine Research.

The market was also lifted by the announcement from the government statistics agency late Thursday that the economy grew 5.4 percent in the first quarter from a year earlier - the first interannual rise since 1998. SANTIAGO, Chile (AP) -- Chilean shares on the Santiago Stock Exchange fell Friday for the third session in a row, with heavyweights Entel and D&S declining, on the background of a sharp retreat in Brazilian shares.

Chile's blue-chip Ipsa index slipped 0.7 percent to 1244.85 points from 1253.56 Thursday, as did the Inter-10 index of more liquid, internationally traded Chilean shares, which ended at 121.51 from 122.31.

Volume bounced back to 13.22 billion pesos from 8.89 billion.

Brazilian shares fell far faster than their Chilean peers. Brazil is often considered a barometer for sentiment toward South America.

However, the declines in Chile continued to be gradual, considering the market's near-30 percent surge this year. CARACAS, Venezuela (AP) -- Venezuelan shares ended slightly lower Friday, with the IBC General Stock Index losing 0.1 percent to close at 13,681 points.

The exchange's biggest stock, CA Nacional Telefonos de Venezuela, which accounts for 40 percent of the IBC, ended 25 bolivars lower at 4750 bolivars.

CANTV has found buyers after a decision by the company's transfer agent to resume converting local shares to American Depositary Receipts.

The process was suspended in February when the government imposed currency controls to protect reserves severely affected by a two-month general strike that began Dec. 2, 2002.

The transfer agent resumed the conversions after it received clarification the process wasn't against the new rules, officials said.

Some investors are converting CANTV shares to ADRs, and selling them in the U.S. as an alternative to buying the greenback on the black market, traders said.

Posted on Wed, Jun. 18, 2003 Associated Press

NEW YORK - Crude futures fell sharply Wednesday on the New York Mercantile Exchange, as traders dumped contracts following weekly inventory reports that showed a sharp increase in crude-oil inventories from higher imports.

In the week ended June 13, crude stocks notched a 3.9-million-barrel build to 288.3 million barrels, as oil imports rose by 418,000 barrels a day to 10.302 million barrels a day, according to the Energy Information Administration.

The EIA, the Energy Department's statistical arm, says it considers imports above 10 million barrels a day to be extremely high.

The inventory build helped reverse most of a 4.6-million-barrel decline in crude stocks reported last week and was widely seen as bearish by market participants.

Before the EIA report and a similar report Wednesday from the American Petroleum Institute, analysts were divided on whether the data would show a crude build for the week. But even analysts who expected a build estimated an average increase of only 2.3 million barrels.

The greater-than-expected build in crude stocks and imports may keep the market under pressure for the remainder of the week, barring any major news, said John Kilduff, an analyst for Fimat USA Inc. in New York.

"These numbers are solidly bearish on several fronts," he said, adding that more imports from Venezuela likely contributed to the higher import levels.

Bill O'Grady, an analyst for A.G. Edwards in St. Louis, agreed.

"I would suspect we're going to drift down further on the reports," he said. "Imports have really ramped up for crude oil."

He added that while bearish elements of the reports "may just be a one-week event," prices likely will continue to remain pressured by a weak economy.

The API, a trade group, reported crude inventories and imports increased to levels closely mirroring the EIA's.

Light, sweet crude futures for July delivery traded on the New York Mercantile Exchange as low as $29.80 a barrel Wednesday. July futures settled at $30.36 a barrel, down 71 cents.

On London's International Petroleum Exchange, August Brent settled down 52 cents at $26.15 a barrel.

Petroleum products followed crude lower Wednesday, although analysts' reactions to gasoline-inventory data were varied.

While some analysts saw EIA data of an 800,000-barrel drop in gasoline inventories to 209.1 million barrels on an increase in demand as supportive, others pointed out that demand is still too low to effectively undergird prices.

"I think there is some pent-up demand for gasoline," said Phil Flynn, an analyst at Alaron Trading Corp. in Chicago. "As soon as the weather heats up, the demand is going to heat up. I think you'll see a big surge in demand in the coming weeks."

However, A.G. Edwards' O'Grady called gasoline demand "very disconcerting," as it usually climbs beyond 9 million barrels a day during the summer driving season, which traditionally begins in earnest after Memorial Day. The latest EIA report indicated gasoline demand rose 351,000 barrels a day to 8.88 million barrels a day.

Gasoline and heating oil both fell on the Nymex to levels not seen since mid-May.

July gasoline settled at 83.73, down 1.29 cents on the day.

July heating oil settled at 74.48, down 0.71 points on the day.

Natural gas for July delivery fell 13.1 cents to close at $5.581 per 1,000 cubic feet.

Tuesday, June 17, 2003
(06-17) 16:21 PDT MEXICO CITY (<a href=www.sfgate.com>AP) --

Mexican stocks rallied again Tuesday and rose to their highest level since May 29, 2002, led by broadcaster TV Azteca on an upgrade.

The market's key IPC index closed up 1.6 percent, or 110.74 points, at 7130.23 points. Volume was a solid 135.6 million shares worth 1.64 billion pesos, compared with Monday's 101.1 million shares worth 1.2 billion Mexican pesos.

The local market continued its recent bullish trend, while U.S. stocks rose on some positive economic data, including a 0.1 percent increase in industrial output for May and flat consumer prices last month allaying fears of deflationary pressure.

Broadcaster TV Azteca CPO shares led the charge, soaring 11 percent after its wireless phone affiliate Unefon settled a legal dispute with Canada's Nortel Networks, securing continued supplies and extending debt in the process.

SAO PAULO, Brazil (AP) -- Brazilian shares closed lower Tuesday amid expectations the central bank will likely decide to cut the reference lending rate at the end of its two-day meeting Wednesday.

While a rate cut would usually lift shares, selling on the U.S. market and a drop in local banking stocks pushed the main Sao Paulo stocks index lower, closing 0.4 percent down at 13,776 points. Volume totaled a strong 644 million reals.

Economists believe the central bank will opt for a symbolic cut of 50 basis points to 25.50 percent to help provide some relief for a sagging economy at a time when consumer price inflation is slowing.

Expecting such a cut, which would be the first of its kind in about a year, investors sold banking stocks as earnings are highly sensitive to any changes in the key lending rate, said a Sao Paulo-based trader.

BUENOS AIRES, Argentina (AP) -- Argentina's large-cap Merval Index continued last week's voluminous rally Tuesday as investors deepened their positions during the week's first trading day.

At the close of Tuesday's session, the Merval had surged 23.55 points, or 3.06 percent, to 791.94 points, surpassing levels last seen in October 1997. The broader General Index gained 766.25 points, or 2.32 percent, to close at 33,762.49 points.

Analysts said the local markets - closed Monday for a national holiday - benefited from the positive sentiment sweeping through global stock exchanges. On Monday, the Dow Jones Industrial Average rose 2.21 percent, following gains in European and Asian markets.

"Trading today showed a consolidated rise in line with international markets and funded by new capital," said Hernan Fardi, the senior analyst for Maxinver.com, a local financial consultancy.

Over the past two weeks, Argentine and international investors have begun staking positions in more liquid local stocks, lured by better returns on shares than government debt instruments. Such shifts helped push the Merval 6.7 percent higher last week and have made it the best performing market in the world.

SANTIAGO, Chile (AP) -- Chilean shares on the Santiago Stock Exchange rose again Tuesday, boosted by gains in utilities-holding Enersis, retailer Falabella, and airline LanChile that were underpinned by rising U.S. share prices, traders said.

Chilean shares had lost their impetus in recent sessions after a prolonged rally.

Chile's blue-chip Ipsa index ended up 0.4 percent at 1282.64 points from 1277.94 Friday. Markets were closed Monday for a national religious holiday.

The Inter-10 index of more liquid, internationally traded Chilean shares gained 0.7 percent to 124.69 from 123.81, driven higher by rising U.S. stocks.

Volume rose slightly to 17.77 billion pesos from CLP16.44 billion.

CARACAS, Venezuela (AP) -- Venezuelan shares ended mostly unchanged Tuesday, with the IBC General Stock Index losing 0.5 percent to close at 13352 points as investors returned from a long weekend.

Local markets were closed Monday to mark a religious holiday.

The exchange's biggest stock, CA Nacional Telefonos de Venezuela, which accounts for 40 percent of the IBC, ended 85 bolivars higher at 4,600 bolivars.

Trades in CANTV, as the company is known, were equivalent to about US$1.58 million out of the exchange's total volume of US$1.71 million.

CANTV has found buyers after a decision by the company's transfer agent to resume converting local shares to American Depositary Receipts.

rediff.com, June 17, 2003 17:35 IST

Insider trading -- a punishable offence in the United States -- which increases stock market volatility, is relatively high in India, China, Russia, Venezuela and Mexico, according to a study done for the International Monetary Fund.

The Global Competitiveness Survey prepared by Julan Du, Professor at the Chinese University of Hong Kong, and Shang-Jin Wei, an Advisor in the IMF's Research Department, looked at 50 countries.

Insider trading involves the trading of stocks by people who have access to information that is relevant to the value of the company and, hence, the price of the stock.

The United States has arguably the most stringent regulations in regard to insider trading, the study notes.

While the US has expanded its definition of 'insider', in most other countries the definition is less broad.

Du and Wei say that because insider trading tends to be illegal, it is difficult to measure directly.

"You must use perceptions to estimate the degree of insider trading; you cannot count the amount of money changing hands," says Du.

Wei said that the results of their study "clearly show a positive association between the degree of insider trading and the degree of market volatility."

"Furthermore, we find the effect to be quantitatively significant. For example, the Chinese stockmarket is much more volatile than the US market. Our study suggests that the greater prevalence of insider trading in China has a lot more to do with this higher volatility than, say, more volatile economic fundamentals or economic policies in China."

By Thom Calandra, CBS.MarketWatch.com Last Update: 2:00 PM ET June 16, 2003

SAN FRANCISCO (<a href=cbs.marketwatch.com>CBS.MW) -- This is for the folks with the $5 trillion of money-market funds throwing pennies into the jars of investors.

THE CALANDRA REPORT Get profit-seeking strategies from Thom Calandra based on interviews with experts, research, analysis, and market-moving insight. Subscribe today!

The world over, investors are engaged in a search for greater and greater returns, especially against paltry yields from money markets and other cash-linked deposits.

Pimco, which manages assets in excess of $100 billion, says that "enhanced cash investments," or a mix of short and longer-term debt securities across different investment grades, can dramatically improve returns.

All you have to do is learn to live with a little volatility in the bond markets.

Or the currency markets.

Investors of late have been looking outside the U.S. for higher-yielding certificates of deposit. A 6-month certificate of deposit in Australia, for example, yields about 4 percent, far more than a similar one in the U.S.

But back to the bond market. "Two tough years for bonds were 1994 and 1999. During both periods, the U.S. economy was strong and interest rates rose, hurting bond performance," say Paul McCulley and Paul Reisz of Pimco, which specializes in fixed-income securities.

The two managers, who are part of Pimco's enhanced cash team, say investors seeking alternatives to that 1 percent money-market deposit might consider a selection of so-called ultra-short debt maturities, those of six years and less.

During the rocky bond market in '94 and '99, for instance, ultra-short and short investment-grade bonds, and short municipal debt strategies performed positively, they say. "The ultra-short strategy had slightly stronger performance as a result of its shorter duration or reduced exposure to interest rate risk."

A word of caution for those who think they easily can triple their money market returns with little or no risk: They can't. Creating a mix of laddered maturities in a portfolio is wise for supplementing an investor's cash allocation over five or more years, the two money managers say.

"Over the past five years, for example, taxable money market funds, as tracked by Lipper, returned 4.16 percent, while ultra-short funds returned 4.74 percent and short investment-grade funds 5.49 percent," say McCulley and Reisz. This is the kind of difference investors feel in their wallets, especially in the long run."

The article by the Pimco money managers was published in Investment Advisor Magazine.

The Calandra Report

I'll have more in The Calandra Report later this week on several fronts, including an exclusive natural gas story that may become one of the world's most sought-after investments. I'll also have more on the takeover drama unfolding around Crystallex International (KRY: news, chart, profile).

The miner told the Toronto Stock Exchange on Monday it knew of no corporate reason for a nearly 100 percent gain in the company's shares over a week. The gains came in trading activity that was three to six times average daily volumes for the company's American Stock Exchange and Toronto-listed shares.

Last week's edition of subscription service The Calandra Report examined Crystallex's efforts to develop Venezuela's Las Cristinas, one of the world's largest proven, and untapped, gold reserves. On Monday, Gold Mining Stock Report's Robert Bishop, quoted at length last week in newsletter The Calandra Report, reiterated his belief the Toronto-based company will receive a takeover offer, or some other backing from a big company, and soon.

"Venezuela's National Assembly has now said on four occasions that Crystallex has legally been designated to be the operator of Las Cristinas (foreign companies never own projects in Venezuela, they obtain rights to operate projects)," Bishop said Monday morning.

"Las Cristinas is simply too large a gold deposit selling at too low a price to escape the attention of larger companies," Bishop, one of the longest-running and most highly regarded gold-mining strategists in North America, told his subscribers.

"My observation about some party moving on Crystallex by the time of the company's annual meeting (in another week) is more an observation that management needs to be in a position to offer the prospect of a future that's markedly different from the past, or risk the open revolt of its shareholders."

Bishop, speaking to me from his California office, said Crystallex chief executive Marc Oppenheimer was seen attending the shareholder annual meeting of Glamis Gold (GLG: news, chart, profile) in recent weeks. His attendance at the larger gold company's May 7 Toronto meeting may be sparking speculation in the shares, says Bishop, who believes at least one mining company is conducting due diligence on Crystallex.

I placed a call Monday to Oppenheimer, with whom I spoke last week in San Francisco. I also placed a call to a company spokesman, A. Richard Marshall. On Monday afternoon, Marshall told me he would contact Oppenheimer. Marshall said the company's executives sometimes attend other gold miners' shareholder events to monitor the industry.

Nevada-based Glamis produces gold from mines in Nevada, Mexico and Central America. The company produced 251,000 ounces last year and says in its corporate presentations that it hopes to double that amount.

Those who read The Calandra Report know exactly where I stand on the Crystallex story. As Bishop said, the stock market is valuing a roughly 21-million-ounce Las Cristinas resource, some 9.5 million ounces of that considered a proven reserve, at roughly $5 to $6 an ounce. Crystallex International shares Monday afternoon were selling for $1.76 on the American Stock Exchange and $2.34 Canadian (CA:KRY: news, chart, profile) on the Toronto Exchange. Thom Calandra's StockWatch is CBS MarketWatch's flagship column. The regular report is in its eighth year at CBS.MarketWatch.com. Thom Calandra is also author of subscription service The Calandra Report.