WEEKAHEAD-Latam stocks to look inward for direction
Reuters, 06/11/2000 13:25
By Tiffany Woods
SANTIAGO, June 11 (Reuters) - Latin American stocks will look inward for direction this week with domestic issues taking up much of the spotlight, market watchers said.
Brazil will eye a Congressional vote, and Mexico is seen cheering a telecommunications alliance while preparing for a presidential election.
Venezuela will look for new shares in which to sink its money after a deal in the electric sector reduced liquidity in its benchmark stock.
Farther south, Argentina will try to regain confidence after Friday's general strike in which workers protested austerity measures. Neighboring Chile is expected to sleepwalk through another slow week.
The main outside news is seen coming from the United States, where consumer price inflation will be released and could give a hint as to the future of U.S. interest rates.
BRAZILIAN stocks will meander as investors keep one eye on volatile U.S. equities while watching out for local events that could provide some direction.
Brazil's Bovespa index (INDEX:$BVSP.X) is trying to consolidate above 16,000 points but those efforts may meet with ups and downs as the market swings with U.S. indices, traders said.
"There will be some events during the week when the market may rise or fall," said Sergio Airozo, head trader at ABN AMRO in Sao Paulo. "The Brazilian Congress will vote on the law on public companies, and then we have U.S. consumer price inflation."
Rising U.S. consumer prices could spur authorities there to put the brakes on growth by raising interest rates again. Higher U.S. rates tend to drain capital from emerging markets like Brazil as investors seek out higher returns at a lower risk.
Brazil's index slipped 0.3 percent to 16,342 on Friday amid low volume. The index has added 9.3 percent this month but remains off 4.4 percent since the start of the year.
In MEXICO, the IPC index of 35 leading shares <.MXX> may rally early this week as players keep cheering a $3.5 billion South American alliance between telecommunications giant Telmex (MEX:TELMEXL) (NYSE:TMX) and Bell Canada International (TSE:BI).
"We think it'll rally to 6500-6600 points. The telecommunications sector is leading the market," said Braulio Serna, an economist with the CIDE economic think tank.
The IPC ended Friday at 6398.73 points. That represented a 3.45 percent fall for the week as Mexican markets were flayed by jitters over the July 2 presidential election.
Analysts said stocks in ARGENTINA would be largely affected by the government's ability to hold its ground on deficit-reducing austerity measures despite widespread popular opposition and signs of discord within the cabinet.
Late May's announcement of $938 million in government spending cuts was applauded by foreign investors but sparked a nationwide general strike on Friday.
"Nearly all of the recent gains on the bourse have been based on the assumption the government spending cuts will go through. But if they give into the pressure, it's anybody's guess what will happen," said a trader.
Political uncertainty cowed the MerVal <.MERV> index into a 2.3 percent decline last week, leaving it at 490.07 points on Friday, 11 percent lower in the year so far.
In CHILE, stocks are set for another sluggish week with no market-moving news in view, traders said.
The IPSA <.IPSA> index of leading stocks rose 0.70 percent to 99.70 points on Friday, down just 0.3 percent on the year.
With concerns looming about U.S. rates, shares have been in a lull since February. Not even the elimination of a 1-year holding period on capital inflows has been able to boost the market.
In VENEZUELA, investors are expected to shift from benchmark Electricidad de Caracas (VEN:EDC) to other stocks, such as steel maker Sivensa (VEN:SVS.A) (VEN:SVS.B), after U.S. power utility AES Corp. (NYSE:AES) won control of the electric company on Wednesday and made it less attractive by reducing its liquidity, market watchers said.
The IBC index <.IBC> of leading shares fell 4.30 points to end at 6,715.68 points on Friday, down 2.79 percent on the week.
Copyright 2000, Reuters News Service |
