All-Time High for Brazil Stocks Amid Lower Inflation Hopes

Latin American markets were mixed, with Brazilian stocks hitting another record high on upbeat trade data and hopes that Brazil’s central bank will cut interest rates further. Meanwhile, Mexican shares slumped, as investors cashed in some of the market’s recent gains.

Brazil’s benchmark Bovespa Index jumped 272.34 points, or 0.86%, while Mexico’s benchmark Bolsa Index fell 69.06 points, or 0.43%. Argentina’s Merval Index climbed 36.50 points, or 2.15%.

Brazilian stocks advanced, extending Friday’s gains, amid continued optimism about interest rates after Brazil’s central bank last week lowered its 2005 and 2006 inflation forecasts and suggested that more rate cuts are forthcoming.

Lending additional support, the commerce ministry said today that Brazil posted a trade surplus of US$ 4.33 billion in September amid continued strong exports.  In August, Brazil posted a trade surplus of US$ 3.67 billion.

Among individual shares, Embratel said late Friday that it had decided to buy the entire 37.11% stake of Net Serviços de Comunicação SA currently owned by its parent company, Mexico’s Telmex. Embratel will issue 230.4 million new shares to pay Telmex. With the deal, some analysts expected Telmex to consolidate its Brazilian assets under the Embratel umbrella.

In research, an investment bank downgraded Banco do Brasil to "peer perform" from "outperform," citing valuation.  The investment bank also raised it 2005 and 2006 price targets for Banco do Brasil, Bradesco, Itaú and Unibanco, citing expectations of stronger exchange rates for the Brazilian real in 2005 and 2006.

Meanwhile, an investment bank downgraded Brazilian electric utilities Tractebel Energia and Centrais Elétricas de Santa Catarina SA to "peer perform" from "outperform" after shares in both of the companies rose more than 30% in September. "In both cases, the downgrades reflect strong recent share price appreciation," the bank said.

Elsewhere, Mexican shares dipped, as investors locked in some profits after the market finished the third quarter Friday with a record high. Shares were undermined by weakness in the US. Dow amid heightened worries about further U.S. interest rate hikes after data showed an unexpected rise in U.S. manufacturing activity. The ISM manufacturing index climbed to 59.4% in September from 53.6% in August. Economists had forecast a decline to 52.1%.

Among the movers, media conglomerate Televisa was active after saying Friday that it has reached an agreement with electoral authorities to publish its political advertising contracts when campaigns formally begin in January for next July’s presidential elections.

Argentine issues climbed, resuming a recent rally after a bout of profit taking on Friday. News services reported that shares were buoyed by the election over the weekend of a gubernatorial candidate in Corrientes province who is allied with President Nestor Kirchner. It was the first election of the campaign season. Key congressional elections are scheduled for the end of October.

Thomson Financial Corporate Group – www.thomsonfinancial.com

Tags:

You May Also Like

Brazil’s Unemployment Rate Keeps Unchanged: 9.4%

The unemployment rate in Brazil’s six major metropolitan areas in July was 9.4%, stable when ...

Brazil’s Theme Song

The seeds of bossa nova began with the music and movies of the United ...

US Sends Trade Representative Schwab to Brazil to Revive Doha Talks

U.S. Trade Representative Susan C. Schwab will be in Brazil from July 27 to ...

Ready for War: Brazil Buys 250 German Tanks, French Fighters Coming Soon

Brazil has just purchased 250 German Leopard 1 A5 tanks, which will be used ...

Brazil Is Right to Go to the WTO

Today’s defeat of the Grassley-Dorgan payment limit amendment in the U.S. Senate was a ...

Crime and Impunity

Political assassination is an all too common occurrence in Alagoas. Ten percen or more ...

Brazil’s Azzar, Haidresser to Princesses

The Lebanese coiffeur Georges Azzar, who has worked for three years at one of ...

Chemical Industry in Brazil Expects to Grow 19% This Year

Estimates by the Brazilian chemical industry say that industry should post revenues of US$ ...

Brazil Is All Talk and No Help, Says Bolivia’s President

The President of Bolivia, Evo Morales, does not include Brazil on the roll of ...

Fed Up With Criticism Over the World Cup Brazil President Lashes Back

Dilma Rousseff, the president of Brazil, responded angrily at criticism voiced by former soccer ...