Corruption Probes Slow Down Brazilian Bulls

Latin American markets closed the day mixed, with Brazil and Argentina rising while Mexico edged lower on Wall Street weakness and modest profit-taking pressure.

Despite the gains in Brazil, investors remain worried about corruption investigations which threaten to derail economic reforms. Also, Chile reported strong economic growth for the first quarter.


Brazil’s benchmark Bovespa Index jumped 330.35 points, or 1.36%, while Mexico’s benchmark Bolsa Index shed 8.86 points, or 0.07%. Argentina’s Merval Index rose 8.54 points, or 0.59%.


Brazilian shares were higher, snapping back from recent selling pressure. Concerns that a series of corruption and misconduct scandals affecting members of the government will slow economic reforms continued to hang over the market, however.


Late yesterday, a judge on the Supreme Court asked federal police to open an investigation into Social Security Minister Romero Jucá’s alleged fraudulent use of public financing. An investigation is also looking into Central Bank President Henrique Meirelles for tax irregularities.


Turning to corporate developments, Embratel is planning to buy the entire 37.11% stake of local pay television company Net Serviços de Comunicação, currently owned by their parent company Telmex. Embratel will use its own shares to pay Telmex if the two sides reach an agreement.


Also, Korean steel giant Posco signed an agreement to advance studies of a proposal to build a large steel plant on the coast of Northern Brazil with the Brazilian mining giant CVRD. CVRD said the plant would have the capacity to produce up to 7.5 million tons of steel slabs per year.


Mexican markets were mixed to lower, tracking a similar performance in the U.S., as the market reacted to the minutes from the last Federal Reserve policy setting meeting.


The committee stated its ongoing belief that current monetary policy is accommodative and that “the current level of short-term rates remained too low to be consistent with sustainable growth and stable prices in the long run.” Still, many brushed off the report as offering no new insight into where rates are headed.


In local inflation news, the consumer price index for the first half of May fell 0.42%, compared with expectations for a decline of 0.30%.


Shares of Cintra were active, with the stock continuing to build on its gains for the year amid expectations that the government will sell its main holdings in the airline holding company. Cintra runs both AeroMexico and Mexicana.


Turning to Argentina, the market edged up modestly as investors continue to await the finalization of the debt swap. In economic news, super market sales climbed 3.4% in April over the year-prior period, but were down 0.9% from the prior month. Shopping center sales were up 9.4% on the year, but down 0.8% on the month.


Finally, Chilean economic growth rose 5.7% in the first quarter, well above the 5.1% figure the Central Bank had been anticipating, but in line with analyst predictions. Domestic demand jumped 10.8% in the quarter, while gross capital formation jumped 26.1%.


Thomson Financial Corporate Group – www.thomsonfinancial.com


PRNewswire

Tags:

You May Also Like

Brazil and France Create Advanced Biology Consortium

Brazil's Embrapa (Agricultural Research Corporation) is starting a partnership with the French Agricultural Research ...

Brazil Is More Concerned with World Cup and Olympics than the Survival of Many

Recently, while visiting the Tunisian immigrants impeded from entering France, presidential candidate Marine Le ...

The Importance of Being Brazil

Brazil has the ninth largest economy in the world, its market size is about ...

With Brazil Leading Way, South America Spends Record US$ 50 Bi with Military

Thanks mostly to Brazil and Paraguay, military expenditure in the twelve countries that comprise ...

Brazilian Embraer Sells 30 New Jets to US Market

Embraer announced that it has reached an agreement for the sale of 30 firm ...

An Autopsy of the Corruption That Sapped Brazil’s Ruling Party

“Hear me, citizens of Brazil, senators, and deputies…” Thus commenced the televised coverage of ...

FTAA: His Work Now is to Convince Brazil’s Lula and His Own People, Says Bush

United States President George W. Bush while visiting Brazil admitted Sunday, November 6, he ...

Brazil’s Central Bank Says Inflation Will Remain Stable

Prices in Brazil, both wholesale and retail, are signaling stability, according to the Focus ...

Under the Gods’ Eyes

I arrived at the Pelourinho on Sunday night. The square exploded with the sound ...

Transgenics Is Like the Plague and Brazil Caught It

On March 4, 2005, Brazil’s Law of Biosecurity, which legalizes the planting and commercialization ...