Brazilian and Latin American markets posted another round of impressive gains, building on yesterday’s surge. Brazilian investors continue to consider the country’s lackluster first-quarter GDP report, which has prompted expectations that the country’s string of rate hikes might end soon.
Mexican issues also tallied gains amid upbeat corporate reports. Meanwhile, Argentine shares continued their ascent, as the government said its debt restructuring is complete.
Brazil’s benchmark Bovespa Index surged 691.00 points, or 2.66%, while Mexico’s benchmark Bolsa Index gained 141.27 points, or 1.07%. Argentina’s Merval Index leapt 15.00 points, or 0.99%.
Brazilian shares continued to rally, with the key Ibovespa index reaching a two-month high. Investors believe the domestic interest rate-tightening cycle could be nearing an end following the release of a weaker-than-expected gross domestic product report earlier in the week.
Amid a dearth of corporate reports, the government approved TAP Air Portugal’s plan to obtain up to a 20% stake in Varig.
Mexican issues also powered higher on continued corporate strength. Gains were made despite relatively lackluster trading activity from the U.S.
On the corporate front, Cemex announced that its U.S. unit intends to form a joint venture with Ready Mix USA focused on the U.S. southeastern market. After three years, Ready Mix USA will have the option to require that Cemex buy its interest in the joint venture.
Elsewhere, shareholders of broadcaster TV Azteca, Grupo Elektra and Grupo Iusacell voted to delist their shares from the New York Stock Exchange. The firms cited “excessive regulation” in the U.S. that raised their expenses and legal risks for the decision.
Turning to brokerage coverage, a major investment bank downgraded steel maker Alfa to “peer perform” from “outperform,” due to the firm’s decision to retain the approximately US$1 billion it will receive from the sale of its steel unit Hylsamex.
Argentine issues jumped on the session, as the country’s controversial debt restructuring concluded. The Economy Ministry confirmed that the government completed the transfer of the new bonds and up-front interest payments owed to bondholders that took part in the US$ 103 billion restructuring.
Spanish-Argentine energy firm Repsol YPF was active on numerous news items. First Calgary Petroleums said it was in the final stretch to securing a deal with the firm to develop an Algerian natural-gas field.
Separately, Repsol signed a memorandum of understanding with U.S.-based Hunt Oil for an LNG project in Peru. Finally, Repsol said that it penned an agreement with CVC Capital Partners to bid approximately 2.5 billion euros for Royal Dutch/Shell Group’s LPG assets.
Thomson Financial Corporate Group – www.thomsonfinancial.com