Latin American equities solidified, with Brazilian and Mexican stocks finishing at record highs. Argentina’s market also rose, amid the winding down of the country’s US$ 103 billion debt restructuring.
Brazil’s benchmark Bovespa Index climbed 258.23 points, or 0.88%, while Mexico’s benchmark Bolsa Index added 14.93 points, or 0.11%. Argentina’s Merval Index rose 9.38 points, or 0.59%.
Brazilian issues advanced to a new high, aided by a temporary drop in crude oil prices after OPEC indicated concern about recent price spikes in a statement over the weekend.
Brazil, while approaching self-sufficiency, still depends heavily on imported petroleum. Still, there was some caution ahead of inflation data that could provide clues regarding the direction of domestic monetary policy.
This week, Brazil’s IBGE statistics institute will report on February IPCA consumer price inflation, which some analysts believe could set the tone for the central bank’s March interest rate decision.
On the corporate front, low-cost airline Gol Linhas Aéreas Inteligentes SA slashed its airfares by up to 56% to prepare for the approaching low season, the company’s marketing and services vice president said.
Late Friday, Brazil’s Banco Opportunity said it plans to sell at least 50% control of Brazilian mobile phone companies Telemig Celular Participações SA and Tele Norte Celular Participações SA currently held by its investment funds.
Elsewhere, Mexican shares edged up to a new record closing high, posting gains despite a late-day pullback in U.S. equities. Trading activity largely followed U.S. stocks, after Mexico’s key IPC index tracked Wall Street’s movement all last week, closing Friday within a few points of its previous all-time closing high set on February 25.
A brokerage firm said in its weekly forecast that it expects the IPC to break through 14,000 this week, with new support at 13,700.
America Movil rose. That wireless phone company is viewed as a potential bidder for Telemig Celular Participações SA and Tele Norte Celular Participações SA, the two Brazilian wireless firms that just went up for sale.
A spokeswoman for America Movil said that it periodically analyzes opportunities in the region, but did not indicate whether the company plans to bid.
Meanwhile, Argentina’s market firmed on reduced volume amid the winding down of the country’s US$103 billion debt restructuring.
Last Thursday. Economy Minister Roberto Lavagna announced that the debt restructuring had won 76.07% approval from bondholders, based on preliminary estimates.
The official tally will be posted on March 18 and the new bonds will be issued on April 1.
One local brokerage highlighted the three issues for the coming weeks: the government’s re-started discussions with the International Monetary Fund over Argentina’s US$13 billion financial program, which was temporarily suspended so officials could focus on the debt restructuring; what, if anything, the government will do with hold-out creditors; and how the central bank will manage monetary policy in the short term, based on the unexpected staying power of a nascent inflationary trend.
On the research front, a major investment bank raised its stance on Argentine equities to “market weight” from “underweight” following the completion of the country’s debt restructuring program last week.
The bank stated that although the preliminary participation rates on the debt-restructuring program were low compared with historical precedents, market participants and the IMF will determine that the swap was successful.
“This will make any legal challenges from holdouts carry less weight, and this alone may affect investor sentiment positively,” it noted.
Also, the bank kept Argentine agricultural firm Cresud on its focus list and added oil and gas company Petrobras Energia SA, and said it likes steelmaker Acindar SA and aluminum producer Aluar. However, those firms are not on its focus list.
Thomson Financial Corporate Group