Brazil’s Corruption Scandal Keeping Country from Having Better Credit Profile

Latin American markets mostly declined on the day, as investors continued their trend from yesterday of booking profits, following broad-based gains early in the week. Brazil tumbled, while Mexico was little changed.

Dampening investor sentiment was a sharp drop in U.S. shares amid rising oil prices and disappointing July same-store sales results. Investors are also preparing for tomorrow’s release of the U.S. employment report.


Brazil’s benchmark Bovespa Index tumbled 244.17 points, or 0.91%, while Mexico’s benchmark Bolsa Index edged down 3.74 points, or 0.03%. Argentina’s Merval Index jumped 18.62 points, or 1.23%.


Brazilian shares continued to give back some of the impressive gains earned earlier in the week. Concerns regarding the latest developments in the alleged cash-for-votes scandal also hit the market.


Congressman Roberto Jefferson, who initially brought about allegations tying the governing Workers’ Party to the bribery scandal, provided further congressional testimony today; although, no new revelations came to light.


In other news, Standard & Poor’s said that the country’s ongoing political scandal is preventing the credit rating agency from upgrading Brazil’s sovereign credit rating.


In earnings headlines, TAM said that higher fuel costs led the airline to post second-quarter earnings before interest, tax, depreciation, amortization and aircraft rental costs of 170.9 Brazilian reais, down from 201.3 million reais in the corresponding period a year ago.


The firm also swung to a net loss of 24.7 million reais, compared to a profit of 206.5 million reais last year. The year-ago figure was bolstered by a gain in aircraft leasing arrangements. Without the gain, the firm would have lost 26.6 million reais. Also, net revenue leapt to 1.246 billion reais from 992.9 million reais in the corresponding quarter a year ago.


Elsewhere, Ultrapar posted a 20% decline in its second-quarter net profit to 89 million reais from 112 million reais a year ago, as the petrochemicals holding firm was hit with high interest rates and the appreciation of the real. Ultrapar’s net revenues rose to 1.20 billion reais from 1.19 billion reais, while EBITDA slipped to 165 million reais from 194 million reais.


Mexican shares ended little changed, as traders digested a recent string of highs for the country’s key index. Also, U.S. markets tumbled due to rising crude oil prices and a mixed bag of retail sales results. Mexico exports the vast majority of its goods to the U.S.


Last night, the Mexican Miners’ and Metalworkers’ Union said that about 4,000 workers will go on strike on August 12 at Grupo Mexico’s five mining and refinery facilities in northern Sonora. The strike could last up to two days if the workers demands for pay and bonus rises are not met.


Argentina recuperated today, regaining some of what was lost during yesterday’s session. Amid the latest financial releases, natural gas pipeline operator TGS posted a second-quarter net profit of 63.8 million pesos, reversing a year-earlier loss of 52.6 million pesos, thanks to favorable foreign exchange rates.


Net sales edged down to 234.4 million pesos from 234.6 million pesos last year, while operating profit declined to 110.7 million pesos from 121.2 million pesos.


Elsewhere in Latin America, Chile’s consumer prices advanced 0.6% in July, compared to the 0.3% uptick seen in June. The robust reading fed speculation of a rate hike next week.


Thomson Financial Corporate Group – www.thomsonfinancial.com

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Very Active at First Meeting of UN’s Human Rights Council

Brazil’s Minister of Foreign Relations, Celso Amorim, is participating today, June 19, in the ...

Brazil Busts Gang Embezzling Education and Health Money

Brazil’s Federal Police kicked off, today, July 18, an operation called Fox (in English) ...

Brazilian Police Arrest for Illegal Logging Those in Charge of Protecting the Amazon

Brazil’s Federal Police arrested 78 suspects of involvement in wood extraction frauds in the ...

Seven Brazilians in the Indy 500 Field. Can They Repeat 2002?

Is there a lucky number seven? For the second time in seven years seven ...

U.S.A. Calendar

ONGOING IN CALIFORNIA Sandrinha Cruz art photos at The Burbank Media Center Mall (818) ...

Japan and China Come to Brazil for East Meets Latin America Encounter

Foreign ministers and envoys from 33 Latin America and East Asian countries on Wednesday ...

Brazil Seizes US$ 761 Million in Pirated Goods

In the first half of 2004, Brazil’s Federal Revenue agency seized approximately US$ 761 ...

Calendar

In a city brimming with earthly delights, one’s thoughts turn to finding a little ...

International Court Rules Brazil Violated Rights of Families of Guerrillas it Killed

The Inter-American Court of Human Rights (IACHR) has ruled that between 1972 and 1974, ...

Brazil Loosens Its Grip on Airports and Ports Privatizing and Leasing Facilities

The Brazilian government is expecting to raise US$ 1.3 billion with the leasing of ...