Brazil’s Trade Surplus Keeps Bulls Busy

Latin American stocks were mixed, with Brazilian stocks posting modest gains amid positive trade data, while Mexican shares followed the U.S. market higher. On the downside, Argentine issues tumbled on profit taking following a five-day rally.

Brazil’s Bovespa Index added 102.04 points, or 0.27%. Mexico’s benchmark Bolsa Index rose 255.28 points, or 1.35%, while Argentina’s Merval Index dropped 46.82 points, or 2.61%.

Brazilian stocks edged cautiously higher, as investors continued to assess the implications of Tuesday’s (January 31) suggestion by the U.S. Federal Reserve that additional interest-rate hikes may be on tap.

Some investors are concerned that further U.S. rate hikes at a time when Brazilian rates are falling could divert funds away from Brazilian bonds and stocks into U.S. treasuries.

At the same time, however, a number of analysts have been bullish on the market’s prospects this year given expectations of solid local economic growth and further interest-rate cuts.

Adding to optimism about the Brazilian economy, the Ministry of Development, Industry and Foreign Trade said today that Brazil posted a sizeable US$ 2.84 billion trade surplus in January, meeting market estimates, which ranged from US$ 2.6 billion to US$ 3.0 billion.

The result was up from a year-earlier surplus of US$ 2.19 billion but below December’s surplus of $ 4.35 billion. January exports totaled US$ 9.27 billion, while imports totaled US$ 6.43 billion.

On the corporate front, paper and pulp company Suzano said it will invest US$ 690 million in 2006 in its Mucuri pulp project in southern Bahia state.

In earnings news, telecom carrier Tim Participações SA, a unit of the Telecom Italia, reported a fourth-quarter net profit of 145 million reais, up 74% from 83.4 million reais in the year-ago period. Results were helped by a 32.8% increase in its client base and tight cost controls.

Separately, the board of Tim Participações approved the incorporation of Tim Celular as its subsidiary, in a move that will organize all of Telecom Italia’s Brazilian assets under a single structure. Pending completion of the move, the company will operate under the name of Tim Brasil.

Meanwhile, a major investment bank downgraded mining company Caemi to "peer perform" from "outperform," citing a plan by controller Vale do Rio Doce to fully absorb Caemi. "Regulatory approval is still pending, but we do not foresee any issues … We are not aware of any legal basis for Caemi shareholders to block the deal," the bank said.

In other research, an investment bank upgraded utility Eletropaulo to "outperform" from "peer perform," citing an attractive valuation and strong growth prospects.

Elsewhere, Mexico’s bolsa posted solid gains, as investors were emboldened by a rise in U.S. stocks amid a sharp drop in oil prices and stronger-than-expected earnings from U.S. aerospace giant Boeing.

In local corporate news, Mexican mining and railroad company Grupo Mexico SA said it plans to list shares in its transport unit ITM upon receiving antitrust clearance for last year’s rail merger. The company added that it is confident that Mexico’s Federal Competition Commission will approve the merger. Grupo Mexico’s stock rose today, as investors continued to cheer the company’s upbeat earnings news yesterday.

Meanwhile, AeroMexico ordered six new generation B737 planes from Boeing Co. The order, due for delivery in 2007, is valued at US$ 372 million.

Argentine issues dropped, as investors took profits following a five-day run-up in the market. Among the movers, flat steelmaker Siderar tumbled as investors cashed in some of the stock’s recent strong gains ahead of new holding company Ternium’s listing of ADRs in the U.S. Ternium, which is owned by local conglomerate Techint, said late yesterday that its ADRs priced at US$ 20 apiece, above price talk of US$ 16.50 to US$ 18.50.

Also, Petrobras Energia Participaciones dropped after saying it would take a charge of 170 million pesos against its 2005 earnings.

Thomson Financial – www.thomsonfinancial.com

Tags:

You May Also Like

Brazil’s Petrobras Spreads the Riches and Boosts Small Businesses

For a little over three years now, more than 2,000 micro and small businesses ...

Brazil Expecting a US$ 43 Billion Surplus for 2005

Brazil’s current account balance was up US$ 911 million in the month of October, ...

Brazilian factory

Brazil’s GDP Grows 4.3% in First Quarter Reaching US$ 307 Billion

Brazil's Gross Domestic Product (GDP) for the first quarter this year grew by 4.3% ...

Alcoa Has Big Plans for Brazil

U.S.-based Aluminum giant Alcoa announced that its Board of Directors has approved investments in ...

RAPIDINHAS

There are elected members of Brazil’s Congress who spent heavily to win a seat, ...

Brazil’s Minister Goes on National TV to Announce Withdrawal from IMF

Brazil’s Minister of Finance, Antonio Palocci, announced on national television and radio network, this ...

Bulk of Brazil’s Petrobras Investment to Be in US, Venezuela and Argentina

Brazil’s government owned oil company Petrobras announced plans to invest US$ 56.4 billion in ...

Over Half of Brazilians Get Middle-Class Status. In the US They Would Be Dirt Poor

The middle class in Brazil reached 51.89% of the country's population in April 2008. ...

This Is Old GDP, Says Minister About Brazil’s Just-Revealed Recession

Brazil's Finance minister, Guido Mantega, when commenting on the Brazilian economy performance in the ...

Brazil: Rio’s Drug Lords Knock Down Military Chopper and Kill Two Policemen

Rio de Janeiro's drug traffickers knocked down a police helicopter that was after them, ...