Latin American stocks rose modestly, but nevertheless extended their streak of record closing highs. Brazilian equities got a boost from a late surge in foreign investment, while Mexican shares were driven upward by a surge in steel issues. Argentina’s market benefited further from optimism regarding the nations’ debt swap.
Brazil’s benchmark Bovespa Index rose 102.29 points, or 0.39%, while Mexico’s benchmark Bolsa Index advanced 46.54 points, or 0.34%. Argentina’s Merval Index firmed 2.79 points, or 0.19%.
Brazilian stocks ended at a record high for the second day in a row, aided by a late surge in foreign investment. The late-session rise followed a session mainly dominated by profit taking after a string of winning days.
Foreign investors have been systematically buying Brazilian equities in recent days, primarily based on solid economic fundamentals, according to analysts.
However, the possibility for another interest rate hike when the Central Bank Monetary Committee meets next Tuesday and Wednesday reared its head amid the latest economic news.
Brazil’s industrial production increased 0.6% sequentially in December, as the pace of an economic advance picked up speed. From the year-ago period, December industrial output grew 8.3%.
The latest results boosted full-year 2004 industrial production to an advance of also 8.3% from 2003.
Elsewhere, Mexican issues strengthened to their sixth consecutive record closing high, paced by a jump in steel shares. The receipts of Mexican steelmaker Hylsamex SA and parent company Alfa SA leapt amid renewed talk that the unit could soon be acquired, traders said.
Conglomerate Alfa has intended to complete the spinoff of the steel producer this quarter, but a potential sale of the division has also been rumored from time to time.
Today, discussion centered on speculation that U.S. steel firm Nucor Corp., which has been named before as a possible suitor, could make a bid, traders noted.
However, Hylsamex said in a filing with the Mexican stock exchange that it had “no knowledge of any particular event” behind the share movement, and officials at Nucor were unavailable for comment.
Also, Mexican retailers Controladora Comercial Mexicana and Organizacion Soriana rose, as both firms have been the subject of speculation as potential bidders if French retailer Carrefour SA decides to exit Mexico.
On Tuesday, Carrefour labeled talk of its departure “just rumors,” and a Soriana spokesman noted the company would “exercise discretion amid so many rumors.”
Separately, Argentina’s market edged further into record territory, driven by optimism regarding the government’s debt restructuring. News of discrepancies that produced an overstatement this week of the mid-exchange acceptance rate was unable to upend the market’s buoyancy.
It was discovered yesterday that a 42.3% acceptance rate estimated on Tuesday for the February 4 cutoff date was wrong and a more modest 35% provided by Economy Minister Roberto Lavagna on Monday was correct. However, analysts downplayed the news, as both numbers were still higher than expectations.
Argentina’s Lower House passed a law late yesterday that bans the government from sweetening its current offer to restructure US$ 103 billion in defaulted debt.
The law, which was approved by the Senate last week one day after Economy Minister Roberto Lavagna announced the proposal, strives to convince undecided bondholders to participate in the exchange offer.
It is viewed as a sort of self-imposed financial handcuff to demonstrate that the government will never provide a superior offer to the existing one, which is estimated to be worth only US$ 0.30 on the dollar to bondholders.
In other news, Argentina’s consumer confidence fell 1.5% in February from January and 6.5% from last year, according to a highly watched index produced by Torcuato di Tella University.
Thomson Financial Corporate Group
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