EMERGING MARKETS-Brazil's Bovespa lags Mexico's IPC in 2012
* Bovespa weighed down by risk aversion, govt' meddling * Mexico's IPC rises on outlook for reforms, U.S. growth * Bovespa up 7.5 pct in year, Mexico IPC rises 17.5 pct By Asher Levine SAO PAULO, Dec 28 (Reuters) - Latin American stocks rose broadly in 2012, with Mexico's IPC index outpacing Brazil's Bovespa and Chile's IPC, though constant concerns over global economic growth and the euro zone debt crisis kept investors on edge. Brazilian stocks whipsawed throughout the year as concerns over Europe's debt crisis, weak economic growth and government intervention in the private sector offset the potential benefit from abundant global liquidity and lower interest rates. Still, many analysts see room for Brazilian stocks to rise in 2013 alongside an improvement in the economic outlook, both domestically and abroad. Brazil's benchmark Bovespa index is set to close Friday with a nearly 1 percent daily gain, as steelmakers and banks rose. This year's 7.5 percent gain was a stark improvement from 2011's loss of over 18 percent, but far short of the over 23 percent rise predicted in a December 2011 Reuters poll. Investors were optimistic at the start of the year as an injection of liquidity by the European Central Bank and record-low interest rates in Brazil fed risk appetite and drove investors towards cheaper stocks with higher potential yields. Optimism soon turned to fear in the second quarter, however, as mounting concerns over the euro zone debt crisis fueled a rapid exit from Brazilian equities and pushed the Bovespa back into the red, where it would mostly remain for the rest of the year. While stocks posted a slight recovery in the fourth quarter, gains were limited by concerns over mediocre economic growth in Brazil and heavy government meddling in the private sector. "2012 was a complicated year," said Illan Besen, an equities specialist at brokerage ICAP in Rio de Janeiro. "It was a year of mismanagement by the Brazilian government in some sectors of the economy and a year when China cut its growth projections, which affect prices for some of the most heavily weighted stocks, such as Vale and Petrobras." While a recent Reuters poll showed that investors are not as optimistic about the Bovespa for 2013 as they were for 2012, most analysts expect the index to post modest gains alongside a steadily improving global economic scenario. "We may begin to see an improvement in domestic activity at the beginning of 2013, with more foreign inflows to the Bovespa," said Luis Gustavo Pereira, a strategist with brokerage Futura Corretora in Salvador, Brazil. Pereira added that the improvement will hinge on whether U.S. policymakers will reach a deal to avert the so-called "fiscal cliff" of automatic tax hikes and spending cuts that could throw the U.S. economy into recession. Mexico's IPC index rose slightly on Friday, contributing to a 17.5 percent gain for the year. Monday's session will be the IPC's last this year. The IPC's performance, which outpaced the S&P 500 index's 12 percent rise in 2012, was based around growing investor confidence in the country's finances, an improvement in the U.S. economy, and optimism that the country's newly elected government would enact wide-ranging economic reforms. "The deficits are controlled, the exchange rate is manageable, we have plenty of foreign reserves, both internally and in terms of a credit line with the IMF with which we can steel against any external shock," said Esteban Velásquez, head of market analysis for fund distributor Allianz Fondika in Mexico City. "Growth has also been revised upwards and reforms, so needed by this country, are around the corner." Chile's blue-chip IPSA posted a 0.16 percent gain on Friday as investors moved around their portfolios in a high-volume, pre-holiday session, leaving its accumulated gain in 2012 at just under 3 percent. Disappointing corporate earnings - due to high energy costs, rising wages and a corporate tax hike - and a slew of capital increases weighed on the IPSA this year. The local index would have ended in negative territory if not for a nearly 4 percent increase in December. "Next year we see the IPSA remaining under pressure until April or May on a number of factors, including uncertainty surrounding the U.S. fiscal cliff, stiff energy costs and ongoing capital increases," said Alfredo Parra, analyst at Santiago-based brokerage EuroAmerica. A low-base of comparison for corporate earnings, though, will help fuel a 10 percent to 12 percent rise in IPSA for all of 2013, Parra added. Latin America's key stock indexes at 1845 GMT: Stock indexes daily % YTD % Latest change change MSCI LatAm 3,801.36 0.89 4.59 Brazil Bovespa 61,007.48 0.98 7.49 Mexico IPC 43,566.69 0.22 17.50 Chile IPSA 4,301.38 0.16 2.96 Chile IGPA 21,070.28 0.2 4.67 Argentina MerVal 2,842.22 0.1 15.41 Colombia IGBC 14,631.24 -0.53 15.52 Peru IGRA 20,404.84 0.13 4.78 Venezuela IBC 471,437.06 0.79 302.81
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