Latin American shares advanced, despite a market closure in Brazil. Mexican equities rallied alongside strength in U.S. stocks, which were lifted by robust corporate earnings and a stronger-than-expected consumer confidence report.
Mexico’s benchmark Bolsa Index climbed 123.20 points, or 0.97%, while Argentina’s Merval Index slipped 2.25 points, or 0.17%.
The local Brazilian São Paulo stock exchange was closed to celebrate São Paulo’s 451st birthday. However, the official Brazilian Census Bureau released figures showing Brazil’s official jobless rate fell to 9.6% in December from 10.6% in November. That result was within economist projections of between 8.9% and 10.2%.
A number of analysts raised their ratings on Brazilian firms. Among them, a brokerage lifted electric power utility Copel to “buy” from “neutral” and another boosted the stock to “outperform” from “peer perform.”
The upgrades followed a company announcement yesterday that it plans to raise prices by an average of 5% from February 1. The price increase reduces some of the discount awarded to customers that pay their bills on time.
Another major investment bank upwardly revised its rating on Brazil’s Telesp to “buy” from “neutral” late Monday on hardy fundamentals for the fixed-line phone company. The bank remarked that while Telesp’s stock has declined 13% so far this year, “company fundamentals are unchanged.”
Elsewhere, Mexican shares rose, deriving strength from a jump in the U.S. market amid positive economic data. On that front, the consumer confidence index rose to 103.4 in January from an upwardly revised 102.7 in December, beating expectations for a decline to 101.5.
Additionally, analysts said that shares were aided by a positive inflation report for the first half of this month, released yesterday.
Still, a brokerage noted in a research piece that the market outlook remains cloudy, with the IPC index needing to remain above its 30-day moving average around 12,693 “to maintain positive expectations.”
However, Mexican shares are anticipated to gain momentum from a positive fourth-quarter earnings season, which is just beginning.
Shares of Cemex were active. Indonesia’s government postponed a signing ceremony that would have settled a long-running dispute with Mexico’s Cemex S.A. de C.V. over control of leading Indonesian cement maker PT Semen Gresik, as political opposition to the proposed deal mounted in Parliament.
Mexican fixed-line services giant Telmex raised US$ 1.3 billion in dollar- denominated debt, increasing the original US$ 1 billion issue amount and marking, according to an underwriter, the largest emerging market corporate debt issue so far in 2005.
Separately, Argentine equities ebbed slightly on low volume, as investors await clearer indications of how many creditors will accept the government’s US$ 103 billion debt restructuring offer.
Analysts said there could be more information on the debt offer’s performance at the end of next week, when a special preferential period for small bondholders ends.
At that time, it is believed that many small bondholders will have opted whether to join the exchange, allowing for a clearer reading on overall participation rates.
According to the Global Committee of Argentina Bondholders, few investors are currently willing to accept the Argentine government’s debt restructuring deal.
Hans Humes, an official of GCAB, remarked that, “The percentage of acceptance is only 23% so far.”
Humes stated that there is considerable opposition to the deal in the U.S., Italy and Germany, although Swiss investors have yet to express a clear view.
GCAB is currently touring Europe, urging bondholders to reject the planned debt swap.
Thomson Financial Corporate Group
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