Once again, this Wednesday, September 17, stock markets across Latin America suffered a beating amid growing anxiety about turmoil in the US financial sector expanding globally and ever-tightening credit conditions.
In São Paulo, in the Brazilian Southeast, the Bovespa index fell 6.7% to 45,908.51, the benchmark's first close below the 46,000-points level since mid-August 2007 and accumulating a 28.14% loss so far this year.
Mexico's IPC index dropped 4.7% to 23,456.84, its worst closing level since October 2006. The market was closed Tuesday for the Independence Day holiday.
Argentina's Merval index tumbled 5.1% to 1,491.98, its minimum since December 2005. This means Argentine equities have lost 9.45% in three days, 16.05% in the month and 30.66% so far this year.
Chile's IPSA lost 2.6% to 2,688.85 while the peso closed at a new 19-month low against the dollar. The peso has weakened by some 21% against the US dollar since the central bank introduced an 8 billion currency intervention in April that involves daily purchases of 50 million US dollars.
Heavyweights in all markets were hit. Brazil's mining firm Vale (RIO) stumbled 7.7% and state-run oil giant Petrobras dropped 4.8%.
In Mexico City, Telefonos de Mexico and retailer Soriana were the only stocks of the 35 that make up the IPC index that posted gains. Shares of the fixed-line operator TMX picked up 0.3% and Soriana rose 0.1%. Volume leader America Movil fell 2.7%, and Wal-Mart de Mexico dropped 1.4%.
Banking and real estate shares fell sharply. Brazilian home builder Rossi Residencial and Mexican real estate development firm Corporacion Geo led decliners with shares of each company down 17%. Brazil's Banco Bradesco (BBD) fell 5.1% and Mexico's Inbursa finished 6.8% lower.
Argentine pulp and paper firm Celulosa Argentina shares fell 6.9% and steel tube producer Tenaris (TS) skidded 4.3%. Chilean chemical firm Sociedad Quimica Y Minera (SQM) lost 5.5% and Enersis (ENI) fell 3%.
However since the "worst is still to come" analysts anticipate that investors pulling cash out of portfolios tied to Latin America could further erode the external accounts of some of these emerging market economies already suffering from declining commodity export revenues and soaring import costs.
A net US$ 2.8 billion was withdrawn from Latin American equity funds year-to-date through September 10, according to Boston-based fund tracker EPFR Global. This could hurt economic growth in the region.
The collapse in Latinamerica was in line with the shake-up on Wall Street. The Dow industrial dropped 4.1% and the S&P 500 Index fell 4.7%. The tech-heavy Nasdaq Composite dropped 109 points, or 5%, to 2.098.85, the index's worst one-day decline since Sept. 17, 2001.
A jump in crude-oil prices also pressured equities and prompted safe-haven flights to gold. Gold prices skyrocketed by US$ 70 an ounce to US$ 850.50, the metal's biggest daily gain ever in dollar terms.