EMERGING MARKETS-Brazil stocks extend slide on rate hike bets

Mon Feb 18, 2013 11:15am EST

Related Topics

* Investors continue to evaluate Mantega's comments
    * U.S. holiday keeps trading volumes thin
    * Brazil Bovespa falls 0.56 pct, Mexico IPC flat

    By Asher Levine and Danielle Assalve
    SAO PAULO, Feb 18 (Reuters) - Brazilian stocks fell for the
fourth straight session on Monday as investors continued to
weigh policymaker signals over potential interest rate
increases.
    Mexico's IPC index and Chile's bourse were
both little-changed, with trading volume thin across the region
due to a national Presidents' Day holiday in the United States.
    Brazil's benchmark Bovespa index extended the
previous session's slide after hawkish comments by Brazil
Finance Minister Guido Mantega on Friday led traders to step up
bets on tighter monetary policy this year. 
    "The market is a bit thin, with the holiday abroad, and
still linked to Mantega's statements about inflation," said
Henrique Kleine, chief analyst with Magliano Corretora in Sao
Paulo.
    The Bovespa lost 0.56 percent to 57,576.39 on Monday, with
options on shares set to expire.
    Despite the index's fall, there is no clear evidence so far
that higher rates in Brazil could depress the local equity
market, Bank of America Merrill Lynch analysts wrote in an
investor note on Monday. 
    The analysts, led by Felipe Hirai, said a rate-tightening
cycle could potentially boost shares of banks, though they would
likely weigh on shares of some companies, such as concessions
firms, shopping mall operators and homebuilders.
    Shares of iron-ore mining firm Vale SA fell 0.77
percent, contributing most to the index's losses, while
steelmaker Usinas Siderurgicas de Minas Gerais SA,
known as Usiminas, dropped 3 percent.
    Banking shares rose, with Ita├║ Unibanco Holding SA
, Brazil's largest non-government bank, up 0.4
percent, and rival Banco Bradesco SA rising 0.2
percent.
    The Bovespa is down about 5.5 percent this year, compared
with a 6.5 percent gain in the S&P 500 index and a 7
percent rise in London's FTSE 100 index.
     Economists trimmed their forecasts for Brazil's economic
growth in 2013 and 2014, a weekly central bank survey showed on
Monday. 
    "In Brazil, everyone believed that an economic recovery
would occur...but in 2013 we're seeing that the situation has
changed a bit," Kleine added. "The capital markets are a bit
locked up due to the doubt, companies are holding back on 
investments...it is hard to see a rising (stock) index in this
scenario."
    Mexico's IPC index was little-changed at 44,184.75.
    Retail giant Wal-Mart de Mexico lost 0.41
percent, offset by a 0.4 percent rise in shares of bottling firm
Femsa 
    Chile's IPSA index was little-changed at 4,590.67
points.
    A technical indicator known as the relative strength index
remained near "overbought" territory however, indicating stocks
may be due to fall in coming sessions.
    
    Latin America's key stock indexes at 1538 GMT:
    
 Stock indexes                            daily %     YTD %
                                Latest     change    change
 MSCI LatAm                    3,867.45     -0.44      2.29
                                                   
 Brazil Bovespa               57,576.39     -0.56     -5.54
                                                   
 Mexico IPC                   44,184.75      0.07      1.10
                                                   
 Chile IPSA                    4,590.67     -0.09      6.73
                                                   
 Chile IGPA                   22,324.94     -0.05      5.95
                                                   
 Argentina MerVal              3,260.67     -1.05     14.24
                                                   
 Colombia IGBC                14,955.37     -0.04      1.63
                                                   
 Peru IGRA                    21,143.51      0.17      2.49
                                                   
 Venezuela IBC               608,684.50      1.86     29.11
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