Latin American stocks climbed higher, even with Brazil’s market still closed for the Carnaval holidays. Mexican shares rose to yet another fresh record closing high, while Argentine equities surged on a favorable acceptance rate so far for the country’s massive debt restructuring.
Mexico’s benchmark Bolsa Index rose 31.73 points, or 0.24%. Argentina’s Merval Index spiked 46.08 points, or 3.21%. Brazil’s stock market remained closed for the Carnival holidays.
In research news, Merrill Lynch raised its price target on Brazilian jet maker Embraer to US$ 40 from US$ 34, based on “higher confidence” in aircraft deliveries for 2007 and 2008.
The bank explained, “Embraer’s first mover advantage in the market for next generation regional jets should cement its position as the global leader in the market for 70 to 110-seat civil jets.”
Elsewhere, Mexican stocks advanced to their fourth straight record close, barely overcoming a bout of afternoon profit taking. Early market strength followed good news for shares related to the air travel business.
The board of Cintra SA approved the reorganization and sale of its assets in three packages, eliminating earlier plans to merge the country’s two largest carriers.
Cintra stated that it will sell leading domestic carrier Aeromexico along with regional unit Aerolitoral, while Mexico’s leading international carrier, Mexicana, will be sold together with a new low-cost carrier.
Mexicana unit AeroCaribe will be included in that sale. The new privatization plan is a complete departure from Cintra’s earlier intention to unite Aeromexico and Mexicana into a single carrier for sale, and merge AeroCaribe and Aerolitoral into another to compete with the larger entity. Still, Cintra receipts finished lower.
Also, Asur shares flew higher, after the southeastern airport group said its January passenger traffic rose 13.7% from the year prior. A major brokerage explained, “January is normally a strong month for vacation travel to Mexico, and last month was no exception.”
On the earnings front, Wal-Mart de Mexico SA announced following Monday’s close that its fourth-quarter net profit leapt 40% to 3.49 billion pesos from the year-ago period as sales rose to 42.35 billion pesos.
For the full year, the Mexican mass retailer saw earnings surge 36% to 7.83 billion pesos on sales that totaled 140.46 billion. “Once again, execution and cost controls delivered higher margins and net earnings, and the results were considerably better than we (and the market consensus) expected,” an analyst commented.
Additionally, Wal-Mart de Mexico said it board of directors has approved a dividend of 0.63 pesos per share. Walmex surged on the news.
Shares of Desarrolladora Homex SA fell, after being cut to “neutral” from “buy” by an influential analyst, which said the stock’s recent climb has pushed it toward its target. Homex shares have leapt 118% since the initial public offering last June, and 52% so far this year.
Separately, Argentina’s market rallied on Italian news agency reports that the country’s US$ 103 billion debt restructuring has won 42.3% acceptance so far, surpassing estimates for the swap’s initial three weeks.
Italian media, citing the Argentine Economy Ministry’s weekly filing to Italian securities regulator Consob, reported the face value of defaulted bonds tendered as of February 4 was US$ 34.65 billion, or 42.3% of the total US$ 81.8 billion eligible.
That percentage is a significant increase from the 26.6% number posted last week and well above the 35% acceptance level predicted by Economy Minister Roberto Lavagna in a Monday night television interview.
On the research front, a major brokerage upped its stance on Argentine steel maker Tenaris SA to “outperform” from “peer perform,” citing a stronger pricing environment for the company’s products and higher revenue forecasts.
Thomson Financial Corporate Group