Banking shares spark Latin American bourses
Banamex surges after Moody's gives nod to Mexico debt
By Tim Wilkins, LatinStocks.com
Last Update: 7:05 PM ET Feb 3, 2000 StockWatch
Telecom Report
NEW YORK (LatinStocks.com) -- Grupo Financiero Banamex-Accival SA led a rally of Mexican banks on optimism an upgrade of the country's sovereign debt may lead to a surge in capital inflows and demand for banking services.
Banamex, Mexico's largest bank gained 8 percent to 41.8 pesos, leading the bolsa index up 4.3 percent to 7,058.21. No. 2 bank Grupo Finananciero Bancomer SA (GFNSY: news, msgs) gained 6.1 percent to 3.8, and Monterrey-based Grupo Financiero Banorte SA gained 6 percent to 12.3.
Moody's Investors Service has put Mexico's on review for a potential upgrade to investment grade, which could lead to a boom of purchases of the country's debt by mutual and pension funds that are currently restricted from buying the securities. That will make it cheaper for companies to borrow and enhance banks' ability to lend.
"An investment grade for Mexico will help everybody, but especially the private sector," said Chip Brown, Latin American economist for Morgan Stanley Dean Witter. "It's going to raise corporate profits by cutting borrowing costs."
Brown has lowered his forecast for Mexico's interest rates in the wake of Moody's decision, and said the rating agency's action suggests an upgrade may come as soon as this year, well before the forecast of most analysts.
Mexico also said today it has revamped its rules for electronic stock trading, which could boost transaction volumes on the Internet stock services launched last week by Banamex and Bancomer.
In Brazil, banks also led gains on optimism the U.S. Federal Reserve's decision to boost its benchmark interest rate a quarter point to 5.75 percent will have a negligible effect on the country's outlook for growth and investment this year.
Banco Bradesco SA (BBQCY: news, msgs), the largest private bank, gained 4.2 percent to 14.9 reals, leading the Bovespa index up 3.5 percent to close at 17,457.12. while Banco do Estado de Sao Paulo SA rose 5.6 percent to 57.98.
Banespa is Brazil's best-performing stock this year, up 12 percent in dollar terms. The sale of the state-owned bank in May is expected to reap more than $3 billion for the government, as international banks including Banco Santander Central Hispano SA (STD: news, msgs), ABN Amro Bank NV (ABN: news, msgs) and Citigroup (C: news, msgs) jockey to carve a niche in Brazil's banking market, the largest in Latin America.
CA Nacional Telefonos de Venezuela (VNT: news, msgs) gained 3.3 percent to 25 1/2. The Venezuelan phone company posted a 0.5 percent increase in dollar revenue last year, even as the country weathered its worst recession in a decade and a rate freeze in the second half.
Electricidad de Caracas, the largest power company, rose 1.2 percent to 206 bolivars, even Venezuela's decision that all electric utilities must negotiate new rates increase cast doubt on the company's plans to raise its tariffs by 10 percent.
"Any undue increases in electricity rates will be eliminated," said Energy and Mines Minister Ali Rodriguez.
StarMedia Networks Inc. (STRM: news, msgs) rose 18.2 percent to 41 3/8 after the Latin American Internet company launched an instant messaging service that is compatible with ICQ, the online chat protocol owned by America Online (AOL: news, msgs) that is used by more than 35 million people worldwide. StarMedia also said it has purchased companies that produce guides to the Brazilian cities of Rio de Janeiro and Sao Paulo, and Medellin in Colombia. On Monday, Merrill Lynch upgraded shares to "buy", citing a bullish view on the region's Internet industry. See full story.
Transportadora de Gas del Sur SA (TGS: news, msgs) gained 6.9 percent to 8 3/4 after the Argentine gas pipeline operator said it has signed a $20 million deal with Pan American Energy and British Gas to build a gas pipeline to neighboring Uruguay. TGS is majority-owned by U.S. energy firm Enron [s ene] and Perez Companc SA (CNPZY: news, msgs).
Cifra SA (CFRCY: news, msgs), Mexico's largest retailer, gained 7.6 percent to 17.32 pesos on optimism the company's earnings surged in the fourth quarter as operating costs fell and Christmas promotions swelled sales. Cifra, which is majority owned by Wal-Mart Stores Inc. (WMT: news, msgs), operates more than 200 supermarkets, 200 restaurants and more than 50 department stores.
Globo Cabo SA (GLCBY: news, msgs), a Brazilian cable television operator, gained 4.4 percent to 23 7/8 after options of its U.S.-listed shares were listed in Chicago. The Sao Paulo Stock Exchange also plans to add Globo Cabo to its benchmark Bovespa index of Brazil's most-traded shares.
Telesp Celular Participacoes SA (TCP: news, msgs) rose 7.3 percent to 42 1/8 after the wireless phone company, a unit of Portugal Telecom SA, posted earnings that were one-half higher than analysts expected in the fourth quarter.
Vina Concha y Toro SA (VCO: news, msgs) gained 2.3 percent to 445 pesos after the Chilean winemaker's association said it expects export growth to more than quadruple this year, gaining 10 percent to around $580 million. Vina San Pedro SA gained 1.1 percent to 4.75.
El Sitio Inc. (LCTO: news, msgs) rose 0.9 percent to 21 1/4 after the company was reiterated with a "strong buy" by Credit Suisse First Boston analyst William Landers. Landers cited the company's strategic alliance with Impsat Fiber Inc. (IMPT: news, msgs) and focus on premium Internet services in Brazil as reasons he expects the company's shares to more than double to $55 this year.
"We believe the El Sitio's shares offer tremendous value at current levels," Landers said.
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