Morgan Stanley raised its weighting to Brazilian stocks as the prospect of lower local interest rates will increase investors’ appetite for equities.
Higher than average commodity prices are likely to persist throughout the year with “relatively low interest rates'’ making “the ideal environment for Brazil,'’ wrote Mario Epelbaum, an equity analyst, in a report today.
Brazilian equities were raised 3 percentage points to 56.3 percent, by Morgan Stanley. The increase came at the expense of Mexico, which had its weighting reduced by 3 percentage points to 32.2 percent.
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Morgan Stanley Ups Mexico's Soriana To Overweight
Morgan Stanley raised its recommendation Monday on Mexican retailer Organizacion Soriana SA (SORIANA.MX) to overweight from equal weight, citing the attractive valuation of the shares.
Morgan Stanley said Soriana remains one of the better-valued retailers in Latin America, while downplaying risks from the company's expansion plans, setting a price target of $5.50 a share.
"e have increased confidence that Sorianas expansion program won' result in a meaningful deterioration in asset returns, based on our analysis of the company's new stores/formats and on the pattern of new store openings," the firm said in a report.
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Currency Strategists: BNP Says Mexico's Peso May Fall
The Mexican peso, up 4.5 percent versus the dollar this year, will drop in 2006 as the central bank cuts its benchmark interest rate amid slowing inflation, said Rafael de la Fuente, chief economist for Latin America at BNP Paribas SA.
The peso has dropped 1.4 percent since the central bank lowered its key rate by a greater-than-expected half a percentage point to 8.25 percent on Dec. 9, the fifth reduction since August. Mexico's currency may also decline on concern lower rates will reduce the yield advantage of domestic bonds.
``We still
Mexico, Brazil Inflation Slows, Paving Way for Rate Reductions
Slowing inflation in Mexico and Brazil, Latin America's two biggest economies, is paving the way for central bankers to cut interest rates and curb gains in their currencies, analysts such as UBS AG's Michael Gavin said.
Government reports scheduled for release today will show Mexico's annual inflation rate dropped to a record low in September while Brazil's rate held near its lowest in 16 months, according to more than a dozen economists surveyed by Bloomberg.
Declining inflation rates may prompt Mexico to reduce its benchmark lending rate for a third straight
Mexico Makes Good on Debt
The Mexican Treasury announces the country has paid off its $1.41 billion in foreign debt to salvage and maintain the country’s financial stability through next year's presidential elections.
Officials say Mexico paid off a portion of 10 bonds due between 2007 and 2033 using funding purchased from the central bank.
President Vicente Fox promises to cover financing needs through 2007 to protect the economy from the financial crises associated with earlier presidential transitions.
Morgan Stanley analyst Gordian Kemen says the announcement came as a surprise to many, but "is very positive.
The government still has $430 million more than what
Bradesco, Grupo Mexico, Televisa, Usiminas: Latin Equity Movers
The following are the most-active stocks in Brazilian and Mexican markets today. In Brazil, the preferred share is usually a companys most-traded class of stock.
The Bovespa index of the most-traded stocks on the Sao Paulo Stock Exchange dropped 761.47, or 2 percent, to 36,605.87 at 12:05 p.m. New York time. Mexicos Bolsa index declined 597.80 or 2.9 percent, to 19,731.69.
Brazil
Banco Bradesco SA (BBDC4 BS), the countrys second biggest non-state bank by market value, fell 1.61 reais, or 2.3 percent, to 68.89 reais. The stock gained 14 percent in the
Petrobras, Vale, Grupo Mexico: Latin American Equity Preview
The following stocks may make significant gains or losses in Latin America today. Symbols are in parentheses after the company name and stock prices are from the last session.
Mexico
Grupo Mexico (GMEXICOB MM): Copper prices yesterday had the biggest two-day drop in eight weeks in New York after a report showed a decline in consumption in China, the world's biggest user of the metal. Shares of Mexico's largest copper producer fell 41 centavos, or 2 percent, to 19.82 pesos.
Cintra SA (CINTRAA MM): Mexico's state-owned company that controls the country's two
Brazil, Mexico's Indexes Fall on U.S. Inflation: Latin Stocks
Brazil and Mexican benchmark stock indexes fell as higher-than-expected inflation in the U.S. raised concern interest rates may keep rising, reducing inflows to emerging markets.
Brazil's Bovespa index of the 57 most-traded stocks in the Sao Paulo stock exchange fell 514.20, or 1.7, to 29,727.41 at 2:13 p.m. New York time. The drop was led by state-controlled oil company Petroleo Brasileiro SA. In Mexico, the Bolsa fell 158.93, or 1 percent, to 15,123.80, led by America Movil, Latin America's largest wireless telephone company.
``Inflation there raises fears of lower growth and
Mexico's Central Bank Reduces Rates to Boost Economy (Update1)
Mexico's central bank reduced its benchmark lending rate for a second time in as many months to help jumpstart a slowing economy, taking advantage of slowing inflation.
The Bank of Mexico said in a statement it will allow the overnight rate to decline to 9.25 percent from 9.50 percent following a reduction of 0.25 percentage point at its Aug. 26 meeting, which marked the first time ever the central bank set a rate for the market.
``The Mexican economy reduced its expansion rate during the first half of the year, showing lower
Brazil Bovespa Falls on Politics; Mexico Falls: Latin Stocks
Brazil's main equity index fell for the first time this week, led by state-controlled oil company Petroleo Brasileiro SA, on concern further revelations from a probe into alleged vote-buying may weaken the government.
The Bovespa index of the most-traded stocks on the Sao Paulo Stock Exchange fell 555.25, or 2.1 percent, to 25,364.70 at 1:22 p.m. New York time. The Bovespa gained 3.9 percent for the week, boosted by a poll Tuesday that showed President Luiz Inacio Lula da Silva's approval rating rose in June, easing concern he would lose support over
Mexico Cuts Interest Rate a 4th Month to Spur Economy
Mexico's central bank cut the benchmark interest rate a fourth time in as many months to spur the economy as inflation slows.
Banco de Mexico reduced the overnight lending rate to 8.75 percent from 9 percent, citing an improving inflation outlook. The five-member board led by Governor Guillermo Ortiz reiterated today in a statement its inflation forecast of 3.5 percent for this year, within the target of 2 percent to 4 percent.
``The message is that they'll continue to ease policy,'' Hector Soto, who helps manage $1.2 billion of Mexican
