EMERGING MARKETS-Brazil power utilities lead stocks lower

Wed Mar 20, 2013 1:04pm EDT

Related Topics

* Regulator cuts value of Cemig asset base compensation
    * Move reignites concerns of state influence on industry
    * Brazil Bovespa falls 0.26 pct, Mexico IPC up 0.36 pct

    By Asher Levine
    SAO PAULO, March 20 (Reuters) - Brazilian stocks fell on
Wednesday, led by shares in power utilities after a rate-related
ruling on one company drove fears about a wider impact in the
industry.
    Brazil's benchmark Bovespa index fell for the sixth
session in seven, losing 0.26 percent to 56,215.68. Mexico's IPC
index rebounded from its lowest close since November,
while Chile's IPSA rose for a second straight day. 
    Shares of electricity generator Cia Energetica de Minas
Gerais SA, or Cemig, plunged 13 percent after
Brazilian power regulator Aneel assessed the value of the
company's investments - for which it is eligible for
compensation through rate increases - at nearly 24 percent below
what the company had expected.
    Aneel proposed a so-called regulatory asset base for Cemig's
current rate review cycle at 5.1 billion reais ($2.6 billion),
well below its initial estimates of around 6.7 billion reais.
    The move drove down shares of other electric utilities, with
rivals Light SA slipping 9 percent and Centrais
Eletricas Brasileiras SA, known as Eletrobras, losing
3 percent. An index of power utilities on Brazil's
Bovespa fell 3.14 percent, the biggest one-day drop since
September.
    "It's the hand of the government appearing again," said
Anderson Luz, a partner with brokerage firm Intrader in Sao
Paulo. "The market is seeing this measure as something that
could affect other companies in the sector as well."
    Last year, shares in electricity generators and distributors
lost about 50 percent of their value after President Dilma
Rousseff's government enacted legislation to cut power rates by
renegotiating the terms of their concessions.
    Concerns over such government intervention in the private
sector have put a cap on potential gains in the Bovespa while
other global markets have risen to record highs. Some analysts
say an increase in benchmark interest rates may help address
those fears by signaling the government is willing to address
rising inflation with a more flexible, better-directed economic
policy. 
    Commodities exporters helped support the Bovespa. Shares of
OGX Petroleo e Gas Participacoes SA, the oil company
controlled by Brazilian billionaire Eike Batista, rose 4.8
percent and iron-ore mining firm Vale SA gained 2
percent. 
    Analysts said most of the gains were due to bargain hunting
after recent declines, as easing fear over the financial crisis
in Cyprus helped support demand for riskier assets.
    Mexico's IPC index rose 0.36 percent following a
two-day decline of 3 percent. 
    Shares of retailer Grupo Chedraui rose 0.4
percent, contributing the most to the index's rise, while
conglomerate Alfa gained 1.5 percent.
    Chile's IPSA index rose 0.19 percent. Shares of
industrial conglomerate Copec climbed 1 percent.
    Shares of LATAM Airlines Group fell 1.3 percent
after the company said late Tuesday that net profit dived 96.6
percent in 2012 to $10.96 million due to higher taxes in Chile
and the cost of its takeover of Brazilian airline TAM.
 
       
    Latin America's key stock indexes at 1610 GMT:
 Stock indexes                            daily %     YTD %
                                Latest     change    change
 MSCI LatAm                    3,780.98      0.22     -0.66
                                                   
 Brazil Bovespa               56,215.68     -0.26     -7.77
                                                   
 Mexico IPC                   42,211.79      0.36     -3.42
                                                   
 Chile IPSA                    4,439.64      0.19      3.21
                                                   
 Chile IGPA                   21,749.27      0.14      3.22
                                                   
 Argentina MerVal              3,455.62      1.06     21.07
                                                   
 Colombia IGBC                13,982.71      0.17     -4.98
                                                   
 Peru IGRA                    19,765.88     -0.25     -4.19
                                                   
 Venezuela IBC               632,130.00      0.21     34.09
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