LATIN AMERICAN MARKETS: Mexico Rises As Investors Eye Bargains,
Rate Cut
By Carla Mozee
Mexican stocks rose Thursday as investors sought bargains after a string of
losses and as investors prepare for a central-bank decision that could result in
a hefty interest-rate cut.
Mexico's IPC rose 1.1% to 23,405.93 with shares of cement maker Cemex (CX) up
3.1% and banking firm Grupo Financiero Banorte fronting advancers with a rise
of 6.3%.
But bank firm Grupo Financiero Inbursa slipped 1.2% and Banco Compartamos
slumped 5.1%. The microlender will be dropped from the benchmark MSCI Latin
America Index as a result of the semi-annual rebalancing of MSCI indexes.
Thursday's market gains arrive after three straight sessions of declines,
which had set the benchmark back by more than 5%.
Investors appeared to have set aside worse-than-expected U.S. initial jobless
claims as had market players on Wall Street where the S&P 500 Index (SPX) rose
1% after three sessions of losses.
Mexican markets can be sensitive to figures from the U.S. because the country
is Mexico's largest trading partner.
Mexico's central bank is scheduled to release its decision on interest rates
Friday, and market expectations are for a cut of 75 basis points to 5.25%,
according to a poll of economists conducted by Dow Jones Newswires.
The rate decision will be the first since the deadly outbreak of H1N1,
commonly known as swine flu and believed to have started in Mexico, prompted the
government to shut its offices, schools, businesses and public activity. Scores
of flights and travel into Mexico were also canceled or postponed.
Officials have said Mexico stands to lose about $4 billion in business from
tourists and that the outbreak could hurt gross domestic product by roughly 0.3%
. The gross domestic product result will be released on May 20.
Policy makers will also consider an annual inflation rate of 6.17% in April.
The upper limit of the central bank's target is 4%.
Emerging-market analysts at Barclays Capital Research said Wednesday they now
expect a 6% decline in economic growth for the first half of the year, in part
because it expects first-quarter GDP to contract more than 8%, which was "hinted
at in the April 29 inflation report."
Barclays said the change in its first-year outlook is "supportive of our
expectation for Banxico to deliver a further 200 [basis points] in easing,
bringing the overnight rate to 4% by August."
The country's currency, the peso, recently traded at 13.197 per U.S. dollar,
stronger than the 13.313 level in the previous session.
Meanwhile in Brazil, the Bovespa equity index rose 1.6% to 49,446.02, with
Companhia Energetica Sao Paulo up 7.5% after the power provider posted better-
than-expected operating results for the first quarter.
Shares of oil giant Petrobras (PBR) and mining heavyweight Vale (RIO) rose
0.8% and 0.9%, respectively.
Retail stocks were mostly higher after March retail sales volume increased
0.3%, falling short of expectations for a rise of 0.7%. Retail sales rose 1.8%
in March on an annualized basis.
Chile's IPSA rose 0.7% to 2,919.57 while Argentina's Merval fell 0.6% to 1,
415.41.
MSCI Rebalancing
As part of rebalancing by index publisher MSCI Barra late Wednesday, there are
a total of 12 companies that will be taken off the MSCI Latin America Index. The
changes are effective as of June 1.
From Mexico, including Compartamos, Empresas ICA (ICA) will be deleted. Shares
of the construction firm fell 3.6%.
Brazilian wood manufacturer Duratex, home builder Gafisa, retailer Lojas
Renner, meatpacker Sadia and air carrier TAM will also exit in the index.
Duratex shares fell 2.7% while Lojas Renner picked up 2.5%.
Shares of Gafisa (GFA) gained 1.9% and Sadia (SDA) rose 2.9%. TAM (TAM)
finished 5.3% higher.
Argentina's Banco Macro (BMA) oil company Petrobras Energia (PZE), Telecom
Argentina (TEO) and steel maker Siderar will be out of the index. In February,
Argentina was downgraded to frontier market status from emerging market.
Peruvian zinc and copper miner Milpo was also deleted.
The two additions to the index will be Brazilian meatpacker Marfrig and
Chilean power provider AES Gener.
Shares of Marfrig, which reported a less-than-anticipated quarterly loss on
Wednesday, leaped 16%. AES Gener shares gained 2.4%.
The MSCI Latin America Index is up about 30% since the start of the year.
(END) Dow Jones Newswires
05-14-091824ET
Copyright (c) 2009 Dow Jones & Company, Inc.
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