Brazil’s Corruption Probe Scares Investors

Latin American markets were once again mixed, only this time the tables were turned and Brazil posted declines, while Mexico advanced. Meanwhile, Argentina’s market was closed to mark a national holiday.

Brazil followed U.S. markets lower, and was pressured by domestic political concerns. Also, a rebound in oil prices, which once again neared US$ 51 a barrel, is not a plus for the net crude importer. Mexican stocks rose on a light news day.


Brazil’s benchmark Bovespa Index receded 66.82 points, or 0.27%, while Mexico’s benchmark Bolsa Index advanced 37.12 points, or 0.29%.


Brazilian issues returned some of the gains earned in yesterday’s session, amid some mixed economic reports. Political tensions also added to local market volatility.


Congress opened an inquiry today investigating allegations of corruption at state-run firms by government allies. The government has until midnight tonight to stop the investigation by convincing lawmakers to remove their signatures from a petition necessary for the probe to continue.


On the economic front, the Brazilian Census Bureau, or IBGE, said that inflation advanced 0.83% in the April 14 to May 13 period, above the 0.74% rise logged in the March 15 to April 13 period.


The IBGE said the increase was caused by higher prices of government-controlled medical drugs and an increase in electric energy rates. For the year ended May 13, the rate totaled 8.19%.


Separately, São Paulo’s Fipe research institute reported that the consumer price index in Brazil’s largest city advanced 0.50% in the four weeks ended May 23, easing from the 0.58% rise tallied for the four weeks ended May 15.


Also, the IBGE reported that the official jobless rate remained flat at 10.8% in April, ending three consecutive months of advances. The figure arrived at the lower end of analyst estimates and is well below the 13.1% rate logged in April 2004.


Turning to corporate news, Brazil’s Mines and Energy Minister Dilma Rousseff announced that the government may lose state-run oil firm Petrobras SA’s assets in Bolivia due to the heightening crisis in that country. 


Last week, Bolivia signed a new law that raised the combined royalty and tax rate on oil and gas production to 50% from approximately 38%.


Mexican stocks once again headed into the black, following a slight decline yesterday. Trading may be tentative ahead of this Friday’s Bank of Mexico meeting in which it will decide on domestic interest rate levels.


Economists anticipate the central bank will keep rates steady for the second-straight month. In corporate action, Telmex L shares moved higher, as investors continue to cheer the firm’s announcement on Monday that it would split its shares.


Elsewhere, Venezuela’s finance minister announced last night that Venezuela intends to buy an additional US$400 million in Argentine bonds before the end of the year.


Thomson Financial Corporate Group – www.thomsonfinancial.com


PRNewswire

Tags:

You May Also Like

Political Instability Weighs on Brazilian Markets

Latin American markets had a mixed session, with Brazilian shares easing on profit-taking, political ...

Best-seller Books, Plays and Movies

By Brazzil Magazine RIO Amor e Erotismo ­ Contos da Comunidade Kaxinawa (Love and ...

Latin Grammy Celebrates Brazil Dishing Out Awards to Veloso and Mercury

Brazilian singer-composer Caetano Veloso, who is on a three-week tour of the United States ...

Brazil’s Dedini, a World Reference on Ethanol Technology

While pumps in gas stations worldwide churn out gasoline containing increasingly higher doses of ...

Brazil Wins Billion-Dollar WTO Cotton Dispute with US

The United States has lost its final appeal in a billion dollar trade dispute ...

A Candid Talk of Rice with Brazil’s Veja Magazine

During her recent visit to Brazil, last week, U.S. Secretary of State, Condoleezza Rice ...

Celso Furtado: He Thought of Brazil as Brazilian

At a recent meeting in Alexandria, an Egyptian professor asked a question:  In the ...

Brazilians Are Too Cordial to Love Moore

Given all the anti-Bush sentiment in Brazil, I had expected the documentary film “Fahrenheit ...

Brazil’s Trade Surplus Grows to US$ 30 Billion

Brazil sold US$ 1.871 billion in products to the exterior last week and bought ...

Ilhabela, Brazil’s Treasure Island, Gets Spruced Up for the World Cup

Ilhabela, an island off the coast of São Paulo state, 217 kilometers away from ...