Cabinet Changes in Brazil Don’t Stop Market’s Bleeding

Latin American shares witnessed another mixed session Wednesday, with shares following a similar pattern to Tuesday’s trend. Brazilian shares continued to suffer amid the latest developments in the alleged government bribery scheme.

Argentine issues also took a tumble amid inflation concerns. Meanwhile, Mexican issues managed impressive gains despite a steep fall in the U.S. markets amid surging oil prices.


Brazil’s benchmark Bovespa Index declined 157.91 points, or 0.64%, while Mexico’s benchmark Bolsa Index advanced 141.68 points, or 1.04%. Argentina’s Merval Index tumbled 25.86 points, or 1.87%.


Brazilian issues continued to trend lower, as political jitters shadow the region. Also, a surge in crude oil prices, which topped US$ 61 a barrel, pressured Brazil, which is a net importer of oil.


Crude prices received support from tropical storms in the Gulf of Mexico, which forced the closure of several oil and gas rigs. Investors are already concerned about U.S. supplies meeting demand.



Amid the unfolding political scandal, key witness Marcos Valério provided testimony before a congressional committee. Valério was implicated in the alleged bribery scheme. Also, Brazilian parties agreed to create a special committee to fully investigate the bribery allegations.


The investigation will commence in 30 days and last for 120 days. Separately, President Luiz Inácio Lula da Silva replaced three government ministers in a bid to strengthen support in Congress. Two of the seats were given to members of the Democratic Movement Party, which is an ally of the governing Workers Party.


Turning to economic news, the national automakers association, Anfavea, said that Brazilian motor vehicle sales leapt 3.9% in June from the prior month and auto production climbed 0.4%.


Sales surged 15% from the year-ago period. Sales of flexfuel cars, which run on both ethanol and gasoline, surpassed sales of all other vehicles combined for the first time.


On the corporate front, airline Varig said that it has reorganized its management team in order to separate the firm’s operations from its financial restructuring. Varig filed for protection from creditors on June 17.


Elsewhere, iron ore miner CVRD is set to pay US$ 1.2 billion to develop a nickel mine. The mine should have capacity to produce approximately 46,000 tons per year of nickel and 2,800 tons per year of cobalt.


Mexican shares continued to power higher, despite steep declines in U.S. shares amid surging crude oil prices. Mexico exports oil to the U.S.


Airport group Asur announced that passenger traffic at the nine airports that it manages rose a little more than 8% in June, compared with the year-earlier period.


Separately, airline holding firm Cintra SA commenced soliciting letters of interest from potential buyers for AeroMexico or Mexicana. Cintra will notify firms by August 9 to let them know if they qualify to participate in the privatization process.


Argentine shares tumbled yesterday, following yesterday’s indication of higher inflation. Sebastian Katz, subsecretary of economic programming, said that the local government will try to negotiate new pricing agreements for food products to help curtail inflation.
 
It was reported that the Consumer Price Index advanced at a much stronger-than-expected clip in June.


In corporate reports, Spanish-Argentine energy firm Repsol YPF SA intends to acquire a 20% stake in a company that expects to export liquefied natural gas from Peru.


Thomson Financial Corporate Group – www.thomsonfinancial.com

Tags:

You May Also Like

Hoping These Poor in Brazil Will Inspire More than Just a Liberal Guilt Trip

The Scalabrinian Order of the Catholic Church was founded in Italy in 1887 by ...

In Rural Brazil Many Watch World Cup for First Time Thanks to New Electricity

Brazil’s rural electrification program Luz para Todos (Electricity for Everyone), has now reached 3.3 ...

For Lonely Planet Brazil Has Become Hot Tourist Spot

Brazil comes in fifth place among the most sought after destinations for international tourists ...

With the FTAA Everyone Wins, Says Bush in Brazil

In his final address in Brazil, in the Brazilian capital BrasÀ­lia, the President of ...

Paraní¡, Brazil, Promotes Seminar to Boost Its Overseas Sales

The state of Paraná, in the South of Brazil, is promoting the 1st Seminar ...

Brazilian Copper Sector Brings the Country Close to US$ 5 Billion

Revenues of the Brazilian copper industry have risen threefold since 2003. The figures were ...

Brazil Stocks Plunge on Concerns About US Inflation

Brazilian and other Latin American stocks retreated, in line with the U.S. market, as ...

Less than 1% of Brazilians Own 54% of Brazil’s Assets

An estimated 130.000 Brazilians, or about 0.75% of the country's population, have financial assets ...

Brazil Will Never Have Blackouts Again, Promises President Lula

Brazilian President Luiz Inácio Lula da Silva, speaking after a visit to the Peixe ...

Ecuador Bows to Brazilian Pressure and Pays Debt to Brazil

The Brazilian Foreign Affairs ministry revealed that Ecuador has quietly made overdue payments to ...