Brazilian Market High on Low Inflation Expectations

    Latin American stocks posted robust gains, with Brazilian shares getting a boost from a local telecom giant’s share restructuring plan and optimism about inflation and interest rates.

    Meanwhile, Mexico’s bolsa climbed on expectations for positive first-quarter earnings.

    Brazil’s Bovespa Index rose 380.35 points, or 1.00%. Mexico’s benchmark Bolsa Index gained 282.59 points, or 1.46%, while Argentina’s Merval Index leapt 48.36 points, or 2.61%.

    Brazilian stocks gained ground, as investors were cheered by news that fixed line telecom titan Tele Norte Leste Participações (Telemar) plans to decentralize its share structure and migrate shares to Brazil’s investor-friendly Novo Mercado.

    The company said that as part of the share restructuring, current holders of the controlling block of voting shares in the company will sell their shares to the market, in a move that will help ensure widespread ownership by the general public and effectively decentralize control of the company. All of Telemar’s shares will be converted into common shares.

    Lending additional support to the market, economists and analysts polled in the Brazilian central bank’s latest weekly market survey reduced their 2006 inflation forecasts for the third consecutive week, bolstering hopes that the bank will extend its run of interest-rate cuts at its meeting on Wednesday.

    Analysts reduced their forecast for year-end 2006 IPCA inflation to 4.43% from 4.47% last week.  Meanwhile, they maintained their year-end 2006 forecast for the benchmark Selic interest rate at 14%. The bank is widely expected to lower rates by 75 basis points at its meeting Wednesday.

    In other news, steelmaker CSN was in focus after local news services reported that the company’s shareholders will discuss the possible acquisition of can maker Prada at an April 28 meeting.

    Meanwhile, oil giant Petrobras said its petrochemicals unit, Petroquisa, and Citiene, a local textile company, will invest about US$ 490 million to build a new petrochemical factory in Pernambuco state in the Brazilian northeast.

    In broker action, a major firm raised its 12-month price target for the shares of paper and pulp producer Aracruz to US$ 69 from US$ 52.60, citing "an improved outlook for pulp prices."

    Elsewhere, Mexican shares jumped amid optimism about the first-quarter earnings season, which mostly takes place this week and next.

    Reporting Monday, April 17, Banamex, a unit of Citigroup, said its first-quarter net profit rose to US$ 444 million from US$ 373 million last year, helped by strong consumer loan growth. Revenues grew 19% to US$ 1.37 billion.

    On the political front, a poll published today by El Universal newspaper showed that the leading candidate in Mexico’s presidential race, Andres Manuel Lopez Obrador of the left-wing Democratic Revolutionary Party, narrowed his lead to 38% of preferences among probable voters in early April, down from 42% in March.

    Felipe Calderon of the ruling National Action Party rose to 34% from 32% in March, and Roberto Madrazo of the Institutional Revolutionary Party rose to 25% from 24%.

    Argentine issues rallied, following the rest of the region’s move higher. In economic data, Argentine consumer confidence sank 9.75% to 54.02 in April from a record 59.9 the previous month in Torcuato Di Tella University’s survey of consumers. Confidence had surged 6.5% in March.

    Thomson Financial – www.thomsonfinancial.com

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    How Brazil Is Trying to Prevent Bird Flu

    Brazil’s federal government is preparing a preventive action plan to ward off possible threats ...

    Brazil Surplus Reaches US$ 36 Billion Despite Beef Embargo

    Brazil’s trade surplus during the first ten months of 2005  surpassed the 2004 results, ...

    Brazil Wants the World Drinking Cachaça

    At present, Brazil produces 1.3 billion liters of cachaça annually. But only 1 percent ...

    IBRD Praises Brazil for the Way It Treats Handicapped Citizens

    Brazil is advancing "hugely," compared with other Latin American countries, in measures for the ...

    Brazil: FTAA, Hopes and Fears

    Donna Hrinak, US Ambassador to Brazil, is confident that the FTAA will go into ...

    Brazil Gets New Weapon to Detect Illegal GMO Soybean

    US-based Strategic Diagnostics Inc. announced the release of its new, second-generation test to detect ...

    The Art of Money

    The next act is the presentation of the new, amended bill. It is still ...

    Brazil’s Embraer Gets Investment Grade Rating from Standard & Poor’s

    Standard & Poor’s, one of the largest and most prestigious rating agencies in the ...

    London Blasts Shake Brazilian Market

    Latin American shares ended mixed, recovering from losses at the onset of trading. A ...

    Postgraduates in Brazil Are 122,295 with 9% Yearly Growth

    In the past eight years the number of master’s and doctoral programs in Brazil ...