Latin American Markets Lower Today; Brazilian Government Ends Tax on Foreign Bond Buyers, Sending Real Lower

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Latin American stocks are broadly lower, following other global markets south as disappointing economic data in the United States damped expectations for a fast, full economic recovery there.

Here's where the regional markets stand today:

- Ibovespa down nearly 1,000 (-1.9%) to around 53,000.

- IPC (Mexico City) down 352.5 (-0.9%) to 40,397.9.

- Santiago Index IPSA down 6.64 (-0.16%) to 4,192.19.

- Merval Buenos Aires down 6.5 (-0.2%) to 3,436.

Losses for the Ibovepsa index tracking Brazilian stocks are accelerating late in afternoon trade after the government removed a 6% tax on foreign investments into Brazilian fixed-income bonds and sparking a wide swing in the Brazilian real, which reversed its early gains to fall over 1% against the U.S. dollar.

The real fell 7% last month to around BRL2.14 per dollar, largely due to dollar appreciation rather than any macro or fundamental factors affecting the Brazilian currency, according to a new research note today by the Credit Suisse macro research team.

Among the individual stocks Credit Suisse believes could benefit from recent currency trends are Braskem SA ( BAK ), the petrochemicals and plastic firm which sets its local prices at international parity. At last look, U.S.-traded BAK shares were unchanged at $15.52 each.

Due to their export profiles, Credit Suisse also sees meat processor Minerva (BEEF3.SA) and diversified miner Vale SA ( VALE ) also being influenced by currency moves with a substantial portion of revenues priced in dollars. Steelmakers such as Gerdau ( GGB ) and SID Nacional (CNSA3.SA) also compete internationally and are seen as benefitting from a weaker real. VALE is trading about 2.6% lower today while BEEF3.SA is down about 1.9%. GGB is down nearly 3% today while CNSA3.SA is about 2.8% lower.

On the other hand, the state-owned energy firm Petroleo Brasileiro ( PBR ), more commonly known as PetroBras, has its prices fixed by the Brazilian government but has its imports denominated in dollars, could be negatively affected, at least during the short-term, Credit Suisse said. U.S.-traded PBR shares are down about 3.1% today.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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