By Carla Mozee
Brazilian and Mexican stocks rose Wednesday, finding support
from data that show the region's largest economies remain on their
respective paths of expansion.
In Brazil, retail sales in March soared by a
stronger-than-expected rate of 15.7% from the year-ago period.
Separately, banking giant Itau Unibanco lifted its 2010 growth
outlook for the country, saying it sees a "Chinese-like rate of
growth" fueled by improvement in economies worldwide.
Meanwhile, Mexican industrial production for March surpassed
expectations by rising 7.6% from the same month last year. Analysts
polled by Dow Jones Newswires had expected a year-over-year rise of
5.8%.
Brazil's Bovespa equity index rose 0.9% to 65,035 in a
broad-based advance led by home builders, finance, utility and
steel stocks.
Overall gains were led by an 8% jump in shares of exchange
operator BM&F Bovespa after the company late Tuesday said its
first-quarter net income rose 25% to 282.6 million reals ($159.6
million), aided by higher trading volume. Analysts polled by
Thomson Reuters had expected 262.7 million reals in profit.
Also higher were shares of Vivo Participacoes (VIV), up 5%. They
extended gains from Tuesday's session after Spain's Telefonica
(TEF) offered to buy out Portugal Telecom's (PT) 50% stake in
Brazil's largest mobile-services operator. Portugal Telecom's board
rejected the offer from its partner in the Vivo joint venture.
Mexico's IPC rose 0.8% to 32,364 as the index also saw
broad-based gains. Advancers included engineering and construction
firm Empresas ICA (ICA) and cement maker Cemex (CX), up 2.4% and
3%, respectively. But decliners included fixed-line giant Telmex
(TMX), whose shares slipped 0.1%, and telecom firm Axtel, off
1.5%.
Mexican stocks moved in line with U.S. stocks, as investors on
Wall Street also appeared to have focused on domestic economic and
financial developments. U.S. stocks rose after the Commerce
Department estimated that U.S. exports and imports in March hit
their highest levels since October 2008. .
Stocks then reached intraday highs after the Treasury auction of
$24 billion in 10-year notes drew solid demand. The Dow Jones
Industrial Average (DJI) rose 137 points, or 1.3%, and the S&P
500 Index (SPX) climbed 1.3%.
Equity markets in Latin America and Wall Street have been
volatile in recent sessions as Greece's debt troubles raised
concerns that it will spread to other euro-zone nations. The
European Union and the International Monetary Fund this week
crafted a nearly $1 trillion bailout deal for vulnerable euro-zone
countries, but worries persist.
Itau ups GDP forecast for Brazil
Despite the recent turmoil in the global financial markets, Itau
Unibanco on Wednesday lifted its estimate for world gross domestic
product growth in 2010 to 4.5%, from its previous projection of
4.2%. Improvement in the U.S. and China are the main drivers behind
the upcoming expansion, wrote Itau's chief economist Ilan Goldfajn
and economist Giovanna Siniscalchi in a note to clients.
Itau said Brazil will be a standout this year as its GDP is
forecast to grow by 7.5%, fueled by fiscal, monetary and credit
measures aimed at stimulating domestic demand. Brazil's GDP
contracted 0.2% last year as it grappled with the global
downturn.
First-quarter expansion should be close to 3% compared with the
same quarter in 2009, which, annualized, would correspond to "more
than 12% - a Chinese-like rate of growth," the economists
wrote.
"Even if a natural deceleration of growth occurs over the coming
quarters, yearly growth should exceed the 6.5% previous
estimated."
But Itau also raised its inflation forecast to reflect
"overheating" in the economy, even at a time when monetary policy
is becoming more restrictive. The key IPCA inflation index should
reach 5.5%. Itau previously expected an increase to 5.3%. The
central bank's inflation target stands at 4.5%.