Latin America Market Snapshot: Bovespa Maintains Winning Streak While Rest of Markets Show Mild Losses

July 29 Market Snapshot:

The Bovespa kept up with its longest winning streak since 2003, while the rest of Latin American markets, affected by Wall Street and a less-than-optimistic view of the U.S. economic recovery, ended mostly with mild losses.

Brazilian equities had a mixed session, but still ended up extending their longest winning streak since January 6. They ended higher for the ninth consecutive day with a 0.22% gain to 66,953.83, up from opening at 66,795, and a trading value of BRL5.551 billion. Cosmetics Natura and Loja Renner were among the main winners, with Cosmetics Natura reaching a record high on the day. Speculation that consumer demand will benefit future revenues and profits benefited consumer goods companies; this sentiment occurred after the release of the central bank monetary meeting minutes, which stated that growth might have reached “sustainable levels” since the start of 2010 and that a slowing Chinese economy and less-than-positive U.S. perspectives will help to contain price pressures. The biggest losses on the day came in on the side of telecommunications. In the Wednesday’s session, a rally in financial services came in higher than the losses in telecommunications, helping to prompt a 20% gain in the Bovespa.

The Brazilian real advanced 0.6% against the U.S. dollar to USD/BRL 1.7593. (See Critical Issue: Brazilian Equities: A Look at the Bovespa).

Disappointing corporate earnings in U.S. markets and lack of optimism in U.S. economic perspectives negatively influenced the Ibovespa during early trading. The Ibovespa soon reversed this trend though, after the Central Bank of Brazil increased its economic growth projection for 2010 to 7.3%, up from 5.8% in March, leading to improved investor confidence in the domestic economy and lower perceived inflation threats.

Mexico’s Bolsa closed the session with a -0.62% change in its IPC index to 32,462.36, with gains in one-third of its titles and losses in the rest. The biggest losses were registered for consumption durables and non-essentials, specifically auto components, transport and financial services. Stocks for the food company Gruma fell 3.1%, the most in two weeks, after reporting its first loss in more than a year due to lower revenues in Venezuela after the devaluation of the bolivar. (See Critical Issue: Chavez’s Nationalizations: What’s Next?). Construction, frequent consumption goods and industrials were among the winners.

The Mexican currency ended 0.1% weaker against the U.S. dollar, at USD/MXN 12.72.

Chile’s blue chip index IPSA ended with a small gain of 0.1% to 4,357, benefited by higher copper prices.  The Chilean peso closed at USD/CLP 523.30, compared with its previous close of USD/CLP 523.40, helped by the launching of the first Chilean international bond in six years. (See Critical Issue: What Are the Economic Repercussions of Chile’s Earthquake?).

Both the Colombian and the Peruvian stock indexes (COLCAP and IGBVL) closed with losses of 1.83% and 0.32%, respectively.

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