Latam stocks rise on earnings, Ukraine optimism
Sao Paulo-Brazil (Mar 18) ) Latin American stock markets rallied on Tuesday, driven by encouraging corporate news in Brazil and easing investor concerns over an escalation of tensions in Ukraine.
The MSCI Latin American stock index posted its biggest daily advance in nearly two weeks, while Brazil's Bovespa rebounded further from a recent eight-month low.
Mexican shares reopened sharply higher after a market holiday on Monday, when global equities markets jumped after a referendum for Crimea to become part of Russia was held without major violence.
On Tuesday, Russian President Vladimir Putin further calmed
markets when he said he did not want to seize other parts of
Ukraine apart from Crimea.
"The market's big worry was that the situation in Crimea
could become the beginning of a series of negative developments
(across the wider region), though people are beginning to see it
as more of an isolated conflict," said Flavio Serrano, senior
economist with Espirito Santo Investment Bank in Sao Paulo.
Among Brazilian stocks making gains were shares of
telecommunications firm Grupo Oi SA, which rallied 5
percent. Reuters reported on Tuesday that Oi lined up firm
commitments from as many as 14 banks to buy up to 6 billion
reais ($2.6 billion) in an upcoming share offering.
Shares of education firm Kroton Educacional SA
and electric utility Copel both rose more than 5
percent after reporting strong fourth-quarter earnings.
Brazilian shares have found technical support near 45,000
points in recent days, though investors remain skeptical of the
Bovespa index. Local stocks have plunged 21 percent over the
past 12 months on a host of concerns including higher interest
rates, weak economic growth, and the potential for errant
government policies ahead of October's presidential election.
"The market is weak, with many macroeconomic factors
weighing on riskier assets, such as Chinese growth concerns,
Ukraine, and inflation in Brazil," said Hersz Ferman, an
economist with Elite Corretora in Rio de Janeiro. "Now and then
we see (signs of) a recovery and the Bovespa is holding onto
45,000 points, but we don't know how long that will last."
Latin American currencies mostly strengthened as risk
appetite increased, with Chile's peso reversing morning
losses caused by traders seeking out dollars to renew currency
forward contracts. The Colombian and Mexican pesos
both remained little-changed from Monday's close.
Brazil's real strengthened about 0.5 percent against
the dollar while yields on Brazilian interest rate futures
ticked higher after central bank chief Alexandre
Tombini told a Senate hearing that the bank should act to limit
the effects of a recent increase in food prices.