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Lower Interest Expectation Warms Up Brazilian Stocks |
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Written by Paul Davee
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Friday, 30 September 2005 |
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Latin American markets were mixed to higher, with Brazilian stocks gaining on expectations of additional interest-rate cuts, while Mexican shares resumed a recent run-up on optimism about the economy. Argentine issues dipped on profit taking.
Brazil's benchmark Bovespa Index jumped 374.97 points, or 1.20%, while Mexico's benchmark Bolsa Index rallied 278.24 points, or 1.76%. Argentina's Merval Index fell 15.06 points, or 0.88%.
Brazilian shares gained ground on hopes that Brazil's central bank will cut interest rates further. In its quarterly inflation report released Thursday, the central bank lowered its 2005 and 2006 inflation forecasts and suggested that more rate cuts are forthcoming.
The bank cut its benchmark Selic base rate by 25 basis points in September to 19.5%. Some analysts now expect the bank to cut rates by 50 basis points in October.
Among individual shares, Braskem was active on news Petrobras will exercise an option to boost its stake in the company to 30%. Petrobras submitted a list of company stakes it has agreed to swap in order to increase its holding in Braskem.
Meanwhile, European steel maker Arcelor said in a filing with the Brazilian Securities Commission that it was exercising its option to buy stakes in specialty steelmaker Acesita SA from two Brazilian pension funds. The deal would cost 259.7 million reais and give Arcelor a 63.94% stake in Acesita. Arcelor currently holds a 38.94% stake in Acesita.
In other developments, a group of investors led by an investment bank and two Brazilian pension funds confirmed their control over Brasil Telecom.
Elsewhere, Mexican shares surged to their fourth record close of the week, resuming a recent rally after a bout of profit taking yesterday.
Among the movers, Cemex extended recent gains following a successful share offering earlier in the week. On Wednesday, Cemex raised about US$ 1.53 billion through the offering, which was related to triggered stock options.
Also, shares of Telmex advanced. Mexican businessman Carlos Slim said yesterday he does not know whether his telecom firm Telefonos de Mexico SA will continue bidding for Colombian carrier Colombia Telecomunicaciones.
Telmex had agreed in August to invest US$ 350 million in Colombia Telecom for a stake of 50% plus one share. However, Colombia Telecom said earlier this week it won't sign a memorandum of understanding with Telmex and will instead open a bidding process.
On the down side, corn flour and tortilla maker Gruma dipped after saying it is mulling a capital increase to boost the liquidity of its shares.
Argentine stocks slumped, as investors took profits following five consecutive sessions of gains. On the economic front, Argentina's central bank governor reassured that the country faced no risk of an inflationary spiral despite a continued rise in consumer prices.
Thomson Financial Corporate Group - www.thomsonfinancial.com
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