Latin American stocks ended the session mixed to higher, as Brazilian equities climbed after recent losses. Investors listened carefully to U.S. Federal Reserve Chairman Alan Greenspan’s prepared remarks to the U.S. House Budget Committee. Some investors were relieved he did not say anything about monetary policy.
Brazil’s benchmark Bovespa Index surged 469.72 points, or 1.69%, while Mexico’s benchmark Bolsa Index slipped 34.51 points, or 0.25%. Argentina’s Merval Index dropped 15.99 points, or 1.00%.
Brazilian shares recovered from a bout of profit taking in the prior sessions as fears about U.S. and domestic interest rates eased. Analysts said investors poured money back into Brazil’s market, inspired in part by U.S. Fed Chief Alan Greenspan’s comments that recent increases in U.S. Treasury rates were “an enigma.”
Analysts explained that Greenspan’s calming remarks tended to reduce fears regarding abrupt U.S. interest rate hikes, with an orderly market for U.S. rates in turn lessening pressure for higher Brazilian interest rates, since Brazil tends to compete with the U.S. for investment dollars.
In corporate news, Refining Director Roberto Costa told reporters that Petrobras plans to invest US$2.8 billion in refineries, pipelines and petrochemicals in São Paulo state until 2010. That issue rose, following a plunge Tuesday.
On the earnings front, leading Brazilian brewer AmBev said its fourth- quarter net profit rose to 459.7 million reais after setting aside 43% of pretax income for taxes and provisions, up from 433.7 million reais in the corresponding period a year before.
However, AmBev’s profit fell short of analyst estimates for roughly 590 million reais, causing the stock to drop.
Shares of fixed-line provider Telemar climbed, prior to its quarterly earnings release before market hours on Thursday.
Elsewhere, Mexican stocks ebbed in quiet trading, alongside weakness in the U.S. market on advancing crude oil prices. Following a record closing high on Friday, Mexican shares have experienced ups and downs this week, generally mimicking movement on Wall Street.
Traders noted that the tone was quiet after the recent rush to buy stocks amid earnings announcements.
Turning to research notes, a brokerage raised its 2005 estimate on Mexican brewer Grupo Modelo’s earnings per share to 2.20 pesos from 2.04 pesos, but downgraded the stock to “hold” from “outperform.”
The brokerage explained that planned beer price increases in the domestic market, a lower tax rate and reduced country risk should aid Modelo’s margins, “but we no longer believe the stock has enough upside potential to justify a recommendation of outperform.”
Also, another analyst began coverage on TV Azteca shares with a “buy” recommendation.
In other news, Mexico’s telecommunications regulator, Cofetel, said the country’s telecom industry expanded last year at 22.6%, its fastest pace since 2000, and that the outlook remains positive for 2005.
Meanwhile, Argentine shares declined, ahead of the planned announcement tomorrow of preliminary bondholder acceptance numbers in the country’s US$ 103 billion debt restructuring.
Volatility has been high over the past week, with equities alternating directions in nearly every session. Analysts note that there is increasing concern that the Argentine market will sell off on Thursday’s figure.
Shares rocketed higher in February on optimism regarding a solid acceptance rate, with any number below 80% resulting in disappointment. Local talk has focused on a result of 75% or above. Analysts cited the potential that the market has exaggerated its acceptance rate forecasts.
Thomson Financial Corporate Group