EMERGING MARKETS-Latam stocks hit 4-mo high on Fed plan, Brazil tax breaks

Thu Sep 13, 2012 6:03pm EDT

Related Topics

* U.S. Fed announces aggressive new monetary stimulus
    * Brazil government extends tax breaks to more industries
    * Brazil Bovespa gains 3.4 pct, Mexico IPC up 1 pct


    By Asher Levine and Danielle Assalve
    SAO PAULO, Sept 13 (Reuters) - Brazilian stocks rose to a
more than four month high o n T hursday after the U.S. Federal
Reserve announced another round of monetary stimulus and Brazil
said it would give more industries payroll tax breaks.
    The MSCI Latin American stock index 
stretched a rally into a seventh day, rising 1.83 percent to a
more than four-month high.
    The Fed launched an aggressive monetary stimulus program,
saying it will buy $40 billion of mortgage-backed securities per
month and likely leave interest rates at current rock-bottom
lows until at least mid-2015. 
    Shares gained after the Fed statement as investors stepped
up bets that the stimulus would help boost growth in the world's
largest economy and lead to more demand for riskier Latin
American equities.
    "The Fed announced very aggressive stimulus," said Pablo
Spyer, a director at Mirae Securities in Sao Paulo. "We'll see a
big inflow of funds to emerging markets."
    Shortly after the Fed's statement, Brazilian Finance
Minister Guido Mantega announced payroll tax breaks for 25
industries, including wood pulp producers, meat packers and
freight transportation. 
    Brazil's Bovespa jumped 3.4 percent to 61,958.12 points, its
highest since early May.
    The Fed's program is expected to weaken the dollar, which
could push up the dollar costs of commodities and boost the
profits of Latin American raw materials producers.
    Brazil's state-run oil company Petrobras climbed
4.14 percent while Vale, the world's biggest iron ore
producer, gained 2.78 percent.
    Brazil's bid to extend payroll tax breaks supported gains of
about 7 percent in meat exporter JBS and as well as
wood pulp producers Suzano and Fibria.
    Still, analysts said worries about slowing global growth and
Europe's debt crisis could continue to weigh on demand for
riskier assets such as Latin American stocks.
    "Despite the gains, it's still early to think about a
consistent trend for the market, because there are still other
risk events out there, such as a China slowdown and the question
of Spain (and Europe)," said Gustavo Mendonça, economist with
Saga Capital in Rio de Janeiro.
    Brazilian logistics company LLX pared losses to
1.26 percent after plunging more than 10 percent earlier in the
session after controlling shareholder Eike Batista canceled
plans to buy back LLX shares and delist the company.
 
    Mexico's IPC index rose 1.01 percent to 40,655.61.
    Retail giant Wal-Mart de Mexico added 1.52
percent while industrial conglomerate Alfa gained
3.16 percent.
    Mexico sends 80 percent of its exports to the United States
and it could see the most direct benefit in Latin America if the
Fed's plan helps boost the U.S. economy.
    Chile's IPSA index reversed early losses, rising
0.29 percent to 4,184.77 and posting its fifth gain in six
sessions as industrial conglomerate Copec rose 0.74
percent. 

    Latin America's key stock indexes at 2100 GMT:
 Stock indexes                         daily %  year-to-
                         Latest         change     ate %
                                                  change
 MSCI LatAm                 3,741.25      1.83      3.86
                                                
 Brazil Bovespa            61,958.12       3.4      9.17
                                                
 Mexico IPC                40,655.61      1.01      9.65
                                                
 Chile IPSA                 4,184.77      0.29      0.17
                                                
 Chile IGPA                20,341.99      0.23      1.05
                                                
 Argentina MerVal           2,508.71      2.97      1.87
                                                
 Colombia IGBC             14,335.83      1.27     13.19
                                                
 Peru IGRA                 21,435.23      2.08     10.07
                                                
 Venezuela IBC            297,072.50         0    153.83
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