WEEKAHEAD-LatAm stocks seen dancing to Nasdaq beat next week
Reuters, 06/4/2000 12:42
By Katherine Baldwin
SAO PAULO, June 4 (Reuters) - Latin American
stocks are seen moving to the beat of U.S.
equities next week as investors brace for a
possible retreat from the recent rally and watch
for further signs of slowing U.S. growth.
In BRAZIL, where telecommunications shares are
among the most heavily traded, stocks will track
closely the U.S. Nasdaq index
(INDEX:$COMPX) of technology shares, market
watchers said.
"The correlation between the Nasdaq and
markets in Brazil and Latin America will
continue," said Scott Piper, portfolio manager at
Deltec Asset Management Corp. in New York.
"The tell-tale signs will be economic data coming out of the U.S. rather
than anything local to Brazil."
The benchmark Bovespa index (INDEX:$BVSP.X) Friday rallied 5 percent
to 16,222, its highest level in seven weeks, pushed up by the Nasdaq's 6.4
percent jump as investors cheered a U.S. jobless report that pointed to
slowing growth.
Investors next week will look out for further signs of a cooling U.S.
economy. Slower growth calms investors' nerves over further U.S. interest
rate hikes that can take their toll on company profits and Latin exports.
In MEXICO, the benchmark bolsa index IPC <.MXX> is poised for a
see-saw week as some investors take their cue from rosy U.S. economic
data while others sell off holdings to take advantage of the local index's 17
percent rally last week.
Friday's surge in the index and the Nasdaq's rally could inspire some
profit-taking, especially in telecom shares.
"The Nasdaq is in total euphoria," said Braulio Serna, an economist at
Mexican think tank CIDE. "We think it could take a break next week."
Mexican stocks could be especially buoyed if the country's northern
neighbor shows signs of refraining from further interest rate hikes since
Mexico sends almost 90 percent of its exports to the United States. Phone
company Telmex (NYSE:TMX) and other hotly traded shares will set the
pace for the Mexican bolsa, Serna added.
Mexico's bolsa Friday posted its biggest one-day gain in 16 months, rising
to 6627, its highest close since April 28.
Analysts said shares in ARGENTINA could extend last week's gains as
investors bet hefty government spending cuts of $938 million will help put
the economy back on track.
The benchmark MerVal <.MERV> index surged 9.5 percent last week,
also egged on by strong May tax data, traders said.
"I'm optimistic and I think these gains will continue. We're all relieved about
the passing of the ghost of U.S. interest rates, which would have especially
pounded Argentina," said Mario Zawadadzki of Schweber y Cia
brokerage.
Analysts said the MerVal's performance would continue to rise if economic
data showed Argentina was speeding up its exit from last year's deep
recession, its worst in a decade.
In CHILE, lethargic stocks are poised for another flat week with no
significant local news expected, traders said.
Nervous about possibly higher U.S. interest rates, local stocks have been
in a lull since February despite the removal last month of a 1-year holding
period on inflows of foreign capital. Not even the government's plan to
eliminate taxes foreign investors pay on equity capital gains haven't
enticed investors.
Defying regional glee over inflation-friendly U.S. data, the IPSA <.IPSA>
index of leading stocks rose just 0.34 percent to 100.79 Friday to end 0.79
percent higher on the year.
The direction of VENEZUELA's small Caracas Stock Exchange is
expected to hinge next week on whether a hostile takeover bid for leading
private power utility Electricidad de Caracas (EDC) (VEN:EDC) by the
U.S.'s AES Corp (NYSE:AES) prospers.
EDC's stock price has roughly doubled since AES launched its offer on
April 28. The tender is due to close at midnight June 6 (0400 GMT June 7).
The market's IBC <.IBC> index of leading shares rose 0.5 percent last
week to close at 6,908.62 points, the highest level since May 15, 1998.
Copyright 2000, Reuters News Service |
