WEEKAHEAD-Latam stocks seen flat to higher
Reuters, 07/23/2000 12:39
By Tiffany Woods
SANTIAGO, Chile, July 23 (Reuters) - Stocks across Latin America are seen trading flat to higher this week with second-quarter results hitting some markets, traders said.
Power utilities and decreased borrowing costs are expected to boost Brazil, while its southern neighbor Argentina will stay put on concern over growing unemployment lines, traders said.
Mexico and Chile will eye second-quarter earnings reports, and Venezuela will gear up for general elections.
BRAZILIAN shares may jog along at a healthy pace this week, buoyed by enthusiasm for the electricity sector and as falling interest rates help channel funds to equities.
Electricity stocks, like Cesp Parana (SAO:CESP4), which leaped to an all-time high on Friday, should extend gains as investors bet the company's imminent sale to private hands will prompt a wave of investment in utilities, traders said.
"The market should continue on this upward track," said Celso Senise, director of Bonval Brokerage in Sao Paulo.
Utility shares, which have been lagging the performance of other stocks, should continue to rise as investors bet Cesp's privatization will be pushed through by November.
Optimism over Brazil's recent aggressive interest rate cuts -- the government has cut rates three times in less than a month -- should also lift stocks as funds migrate to equities from fixed-income assets in search of higher returns, Senise said.
"The interest rate cut took the market by surprise and it's causing a shift in funds," he added.
The Bovespa index (INDEX:$BVSP.X) gained 0.7 percent on Friday to 17,318. The index has risen 3.5 percent this month and is up 1.3 percent since the start of the year.
In MEXICO, shares are expected to recover some of the vast ground lost last week when the IPC index of leading shares <.MXX> sank 9.6 percent.
The key stock gauge eased 46.55 points on Friday to close at 6718.73 points on what became its fifth consecutive decline.
Hefty losses in telecommunications firm Telmex (MEX:TELMEXL) (NYSE:TMX) caused by disappointing second-quarter results were largely responsible for the weekly retreat, traders said.
"I really hope we can see some recovery in the week. There are still earnings reports coming and we don't have major market-moving U.S. indicators scheduled," said the head of a local brokerage in Mexico City.
The second-quarter report season for Mexican companies is due to end next Friday. "I have oversold indicators flashing on my screen. I think it will be a good chance to jump back into shares," he added.
Mexican indicators this week include inflation and trade data, both to be released on Monday. According to a Reuters survey , Mexico's first-half July inflation is seen rising 0.33 percent while the trade deficit is expected to show at $504.34 million.
ARGENTINE stocks are seen almost as stagnant as the local economy, which had investors worried again as May figures showed unemployment had increased to 15.4 percent, up from 14.5 percent in May 1999.
"There's not likely to be much in the way of news next week, so I bet we'll stay pretty close to even while people wait for a possible bump from July tax collection figures," said Ruben Pasquali, a trader for Mayoral brokerage.
The benchmark MerVal <.MERV> index lost 4.7 percent on last week on concern that Argentina was still not emerging fast enough from last year's deep recession.
In CHILE, stocks are poised for a volatile week as second-quarter results come in, traders said. A depreciation of the peso against the dollar is expected to have hurt some companies' non-operating results.
The IPSA <.IPSA> index of leading stocks climbed 0.53 percent to 99.84 points on Friday, up 1.22 percent on the week.
In VENEZUELA, stocks are expected to remain flat to slightly stronger ahead of general elections on July 30, barring any further mergers among the country's recession-tossed firms.
"The stock market always tends to increase after elections. It is possible that the market could benefit this week if investors start to take positions ahead of that," said Hector Perez, of the Inverunion brokerage.
Caracas' IBC index <.IBC> of leading stocks closed Friday at 6,737.80 points, down 3.4 percent on the week on dwindling interest in benchmark stock Electricidad de Caracas (VEN:EDC).
Financial stocks were given a brief lift last week by the announcement of four separate merger deals in the overcrowded sector. Analysts expect the trend to continue. WEEKAHEAD-Latam stocks seen flat to higher
Copyright 2000, Reuters News Service |
