Latin American markets ended flat to higher, as investors had largely priced in an as- expected interest rate hike by the U.S. Federal Reserve. The Fed boosted its target on the federal funds rate by a quarter of a percentage point to 2.5%, noting that any future increases would be measured.
Brazil’s benchmark Bovespa Index climbed 455.90 points, or 1.89%, while Mexico’s benchmark Bolsa Index dipped 1.11 points, or 0.01%. Argentina’s Merval Index slid 2.39 points, or 0.17%.
Brazilian stocks advanced, supported by earnings announcements this week that are viewed as positive by traders. The decision by the U.S. Fed to boost interest rates did not dissuade buyers, primarily as the increase by 25 basis points had been largely anticipated.
That could spur a similar action by Brazil’s central bank when it meets on February 15 and 16 for its own monthly review of rates.
In earnings news, Brazilian mobile phone operator TIM Participações SA said its fourth-quarter net profit fell 23% to 83.4 million reais from the year-earlier period, as higher customer acquisition costs and new investments in a GSM-technology network impacted the results.
However, quarterly revenues increased to 747.7 million reais from 586 million reais the year before, and TIM gained new customers. Investors drove the stock higher, and also lifted fellow phone companies’ shares.
Also, Gerdau rose. Yesterday, the Brazilian steelmaker said its fourth-quarter net earnings rose to 749.1 million reais from 459.9 million reais a year before, as net revenue climbed to 4.89 billion reais from 3.52 billion reais.
State-oil company Petrobras’ issues advanced. The company has announced it signed a memorandum of understanding with the China National Petroleum Corp. to assess possibilities for cooperation in a broad range of activities in the oil industry.
Turning to research notes, Bear Stearns raised its stance on Brazilian electric power utility Tractebel Energia SA to “outperform” from “underperform,” indicating that the firm would benefit from likely higher power prices.
The bank explained, “We believe Tractebel is one of Brazil’s utilities that has the most to gain from the rising trend we expect in generation prices.”
Elsewhere, Mexican equities were barely changed following recent highs. Yesterday, Mexico’s stock market climbed to its second consecutive record close, powered by a surge in homebuilder shares. Earnings announcements, recent credit upgrades and the entry of local pension funds have been supporting local market advances recently.
Amid deal reports, Mexican phone giant Telefonos de Mexico bought a 7.3% stake in Brazilian pay television firm Net Serviços de Comunicação from the controlling shareholder, Brazil’s Globo, for 54.1 million Brazilian reais. Analysts commented that this purchase marks the first in what could be a number of additional investments by Telmex in Brazil.
Meanwhile, Argentine shares weakened, despite a jump in volume, as investors overlooked news that Standard & Poor’s expects to upgrade Argentina’s ratings following the completion of its US$ 103 billion debt restructuring.
S&P stated that it expects to raise the country’s debt to single-B-minus from selective default, Argentina’s rating since December 2001, with the upgrade likely occurring on April 1, the planned settlement date for the record debt swap.
One analyst labeled the Argentine market “apathetic,” as investors await the conclusion of the exchange period, which closes February 25.
While a three-week preferential period for small bondholders expires Friday, the deadline is losing significance for investors.
They view recent selling by Italian minority bondholders to institutional funds as a sign that the success of the restructuring will not be clear until the very end, when institutional creditors make their decisions.
Thomson Financial Corporate Group