EMERGING MARKETS-LatAm assets gain on retail optimism

Fri Nov 13, 2009 5:00pm EST

Related Topics

 * US retail optimism eclipse weak US economic data
 * Retail sales rise more than forecast in Brazil, Mexico
 * Chile warns it may act to curb currency appreciation
 By Walter Brandimarte
 NEW YORK, Nov 13 (Reuters) - Latin American financial
markets tracked Wall Street higher on Friday on hopes U.S.
retailers may have better-than-expected sales in the upcoming
holiday season.
 Raising expectations for the retail performance were
comments by U.S. department store operator JC Penney (JPC.N),
which said earnings for the holiday quarter could beat
estimates, as well as better-than-expected results from
Abercrombie & Fitch (AFN.N).
 Retail sales are also on the rise in Latin America,
underscoring a quick economic recovery that has been attracting
sizable investment flows into the region.
 In Brazil, the government said retail sales volumes
increased for the fifth straight month in September at a
month-on-month pace of 0.3 percent, more than analysts
expected. [ID:nN13355010]
 In Mexico, same-store sales rose 3.0 percent in October
year-on-year, driven by unusually strong sales from department
stores, a national retailer group said. [ID:nN12430456]
 "Outperforming emerging market growth, combined with
lingering excess-liquidity, should remain a key driver of a
slow but structural permanent reallocation of investment
capital into the emerging-market asset class," RBC Capital
Markets analysts wrote in a research note.
 The MSCI stock index for Latin America .MILA00000PUS rose
0.86 percent, closing the week with gains of nearly 2 percent.
 The Brazilian Bovespa index .BVSP climbed 1.36 percent,
while the Mexican IPC .MXX gained 0.79 percent and the
Argentina MerVal .MERV rose 0.63 percent.
 Brazilian stocks had a volatile session, however, before
the expiration of options contracts on Monday.
 Most Latin American currencies posted gains, with the
Mexican peso MXN= strengthening 1.29 percent to 13.0325 per
U.S. dollar and the Brazilian real BRBY finishing 0.99
percent stronger at 1.722 per greenback.
 The Chilean peso CLP=CL jumped 1.12 percent to a 15-month
high of 502.10 per dollar, despite a series of warnings by
officials that the government may intervene to curb its
appreciation. [ID:nN12419196]
 The Chilean currency has been appreciating sharply after
Brazil imposed a 2 percent financial tax on foreign inflows.
The tax discouraged investors from borrowing dollars on the
Chilean market, where interest rates are lower, to buy
Brazilian assets in carry-trade operations.
 Yield spreads between emerging market bonds and U.S.
Treasuries, a key gauge of risk aversion, was stable at 305
basis points at the end of the day, according to the benchmark
JPMorgan EMBI+ index 11EMJ.
(Editing by Diane Craft)

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