Latin American Stock Roundup
Wednesday May 11, 5:18 pm ET
Stocks Fall in Mexico, Brazil and Chile; Rise in Argentina
MEXICO CITY (AP) -- Mexican stocks closed lower in slow trading Wednesday influenced by moves in U.S. markets.
The market's key IPC index closed down 0.3 percent or 32.59 points to 12,464.84 in a quiet day in which 61.8 million shares were traded for 1.65 billion pesos.
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The market followed U.S. equities movements for most of the day, although a rally in the latter half of the session wasn't enough for the IPC to close on a positive note.
BBVA Bancomer said in a report that it expects the local market to remain positive in the near term. "Only a close below the 30-day average of 12,370 would make us change our minds," the bank said.
Among the decliners, retailer Wal-Mart de Mexico V shares fell 1.6 percent to 40 pesos, phone company Telmex L shares fell 0.7 percent to 19.02 pesos, and media group Televisa CPO shares fell 1.2 percent to 31.50 pesos.
Televisa said Tuesday that Chairman Emilio Azcarraga and Executive Vice President Alfonso de Angoitia resigned from the board of U.S. concern Univision. Televisa is also suing Univision for unpaid royalties on programming that it supplies to the U.S. company.
UBS Investment Research said in a report Wednesday that the latest developments are negative for both companies.
"Uncertainty on this subject is likely to persist for some time, which will likely weigh on stock prices," UBS said, but it maintained its "buy" rating for Televisa.
SAO PAULO, Brazil (AP) -- Brazilian stocks closed marginally lower on Wednesday on domestic inflation and interest rate worries.
The benchmark Ibovespa stock index closed 0.26 percent lower at 24,699 points. Volume was moderate at 1.43 billion Brazilian reals.
Stocks rallied in afternoon trading on bullish news from the United States, where officials reported a March foreign trade deficit of just under US$55 billion. The market had been expecting a figure above US$60 billion. Later Wednesday, the U.S. reported an April federal budget surplus of more than US$57 billion.
The U.S. figures helped buoy American stocks, with Brazilian shares following. However, the Brazilian market erased gains to close in the red because of the worrisome domestic news about inflation.
Earlier Wednesday, the Brazilian Census Bureau reported April monthly inflation of 0.87 percent, up from 0.61 percent in March. The April figure brought 12-month inflation to 8.07 percent.
Inflation over 8 percent could prompt the central bank to hike interest rates yet again when it meets next Tuesday and Wednesday to review monetary policy.
The benchmark Selic interest rate is currently a towering 19.5 percent. The central bank has raised the benchmark rate at every monthly meeting since September.
BUENOS AIRES, Argentina (AP) -- Argentine stocks made a slight recovery Wednesday, turning around a four-session losing streak, though caution lingered as investors wait for a U.S. court decision related to the country's US$103 billion debt restructuring.
The benchmark Merval Index rose 1.4 percent, or 19.12 points, to 1,400.46. The broader General Index closed up 0.8 percent, or 472.47 points, at 60,029.86. Volume came in at 69.1 million pesos.
The Merval had fallen 4.2 percent over the previous four sessions, with the continued absence of a court ruling sparking worries that there will be a delay in the decision. A U.S. federal appeals court heard arguments over the status of US$7 billion worth of defaulted Argentine bonds in late April, and investors are hoping for a ruling before the end of next week. If a freeze on the bonds is lifted, the government should be able to settle its debt restructuring -- a process that had been scheduled for the beginning of April.
Analyst Juan Diedrichs of Capital Markets Argentina said expectations are now mounting that a favorable ruling from the U.S. court will arrive next week and the strongest concerns of a delay have already passed after this week's losses.
"It's as if the market is anticipating the unfreezing of the bonds," Diedrichs said. "The market is now more understanding that it's going to be a favorable ruling and is not as concerned with a delay."
SANTIAGO, Chile (AP) -- Chilean stocks closed lower Wednesday, extending their slide from the previous session as select heavyweight issues lost ground.
The 40-share blue-chip Ipsa index closed 0.5 percent lower at 1,977.05 points. Volume ballooned to 46.56 billion pesos.
Lan Airlines was the most active stock of the session as Thursday is the record date for a dividend payment. Its regular stock slid 1.6 percent to close at 4,030 pesos, as investors shuffled portfolios between papers eligible for dividends -- on which capital gains taxes are due -- and those that aren't. Its non-dividend paying stock ended unchanged from Tuesday at 4,006.35 pesos.
Trading in Lan accounted for about 25% of session volume.
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