- The Washington Times - Thursday, January 2, 2003

RIO DE JANEIRO, Brazil, Jan. 2 (UPI) — Latin American stocks were mostly down in the final holiday week of 2002’s trading, as the same worries that investors faced throughout the year remain on the horizon for 2003.

Brazil saw its new president — whose past comments frightened markets, but whose recent moderate talk has soothed them — take power Wednesday.

President Luiz Inacio Lula da Silva and his economic team have surprised investors with their centrist talk and prudent nominations for economic posts. The country’s Bovespa stock index has risen about 30 percent since the Oct. 27 election.

The Bovespa remains, however, about 17 percent down from where it started 2002, its third consecutive losing year and its worst since 1998.

Brazilian investors are now in breath-holding mode as they wait to see if Lula — as the new president is known — sticks to moderation or if he suddenly takes a sharp left turn now that he is in power.

Argentina continues its eternal struggle with the International Monetary Fund on renewing a loan package. Mexico keeps on looking to the U.S. markets for clues rather than its Latin American neighbors and Chile remains the stable darling of the region, though investors there are beginning to fret about low copper prices — the country’s chief export.

The sentiment that Argentina and the IMF are nearing a transitional aid agreement leaves that country’s Merval index poised to be the biggest early winner of Latin American equities in 2003.

The Merval actually rose more than 60 percent in 2002 in the wake of the country’s default last December and the subsequent rotation through power of four presidents in the last two weeks of 2001.

But the index was largely aided by the devaluation of the local currency and a lockdown on banking accounts that was only recently lifted.

Any cash Argentine investors could get their hands on throughout 2002 was socked away in relatively stable blue-chip stocks, rather than leaving the money to wilt as the peso tumbled.

Investors in Mexico are expecting a slow start to the year, with little domestic news on the horizon and the possibility of war between the United States and Iraq and the climbing price of oil souring the mood.

Mexico’s IPC index managed to lose less than 5 percent of its worth in 2002, an impressive feat given the far-reaching instability the region saw and the Dow’s yearly loss of about 16 percent.

As for the markets, Brazil’s Bovespa stock index fell 1.3 percent to 11,318 in light post-Christmas trade last Thursday. Fixed-line phone company Telemar dropped 1 percent, while oil company Petrobras fell 1.7 percent. Aircraft maker Embraer bucked the trend and climbed 2.8 percent. On Friday the index slipped 0.74 percent to 11,234 in sluggish trade. Petrobras lost 2.7 percent while Telemar shed 1.4 percent.

On Monday the Bovespa closed 0.3 percent higher at 11,268 in extremely light trade as investors held their breath and awaited Lula’s presidency to officially begin. Brazil’s markets were closed Tuesday and Wednesday for the New Year holiday.

In Mexico, the IPC index ended last Thursday up 0.5 percent at 6,183 in light post-holiday trade. Fixed-line phone company Telmex closed up 1 percent. On Friday, the index dropped 0.9 percent to 6,126 as it followed Wall Street down. Telmex lost 1.5 percent. Broadcaster Televisa lost more than 2 percent.

On Monday the IPC ticked down to 6,124 in thin and uneventful trade. Tuesday saw the index slightly down at 6,104 late in the day in very quiet trade. Retailer Elektra was down 2.4 percent late.

Argentina’s Merval index lost 0.83 percent to 519 Thursday, mostly on profit taking. Steelmaker Acindar dropped nearly 4 percent after recent gains. Friday saw the index lose 0.2 percent to end at 517.9.

Monday brought a 1.38 percent gain to 525 for the Merval, as investors took confidence in officials’ statements that the country would be able to rollover a Jan. 15 $1 billion debt payment to the IMF. On Tuesday, the index closed down 0.2 percent at 524.9 in extremely thin and uneventful trade. Banco Frances gained 2.6, percent while the energy company Central Puerto added 1.44 percent.

In Chile, the IPSA index inched up 0.1 percent to 84.26 Thursday, with telecom Entel slipping 1.2 percent. The index climbed slightly to 84.37 on Friday, with Banco Santander edging up 0.3 percent.

Monday brought a slight gain to 84.53 in quiet trading. The market was closed Tuesday and Wednesday.

Venezuela’s markets have remained shuttered for nearly a month as a general strike paralyzes the country. Protesters are demanding new elections or the outright resignation of President Hugo Chavez, largely because of his handling of the economy.

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