EMERGING MARKETS-Brazil stocks hit key support as power firms slump

Wed Mar 20, 2013 7:52pm EDT

* Regulator cuts value of Cemig asset base compensation
    * Move reignites concerns of state influence on industry
    * Brazil Bovespa falls 0.59 pct, Mexico IPC up 1.04 pct


    By Danielle Assalve
    SAO PAULO, March 20 (Reuters) - Brazilian stocks fell on
Wednesday to a key support level, as shares in power utilities
after a rate-related ruling on one company drove fears that
wider government measures could hit  the industry.
    Mexican stocks, meanwhile, bounced back from their cheapest
since late November, tracking U.S. stocks higher after the
Federal Reserve reassured investors that it would keep
supporting the economy of the United States, Mexico's top
trading partner. 
    Brazil's benchmark Bovespa index fell for the sixth
session in seven, losing 0.59 percent to 56,030 to close at a
key support level. A further drop could take the index to its
lowest level since last November.
    If bargain hunters don't jump in soon, a strong break of the
56,000 level could bode for further losses. 
    Concerns about sluggish domestic growth and rising inflation
have made Brazil's stock market one of the world's worst
performers in recent months, but it should bounce back by year
end, a Reuters poll found. 
    "The biggest concern is with the domestic scenario," said
Marcio Cardoso, managing partner of brokerage Titulo.
    Shares of electricity generator Cia Energetica de Minas
Gerais SA, or Cemig, plunged 13.9 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.
    The move drove down shares of other electric utilities, with
rivals Light SA slipping 6.20 percent and Centrais
Eletricas Brasileiras SA, known as Eletrobras, losing
4.33 percent.
    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. 
    "The government acts in a way that leaves the investor
unsafe," Titulo's Cardoso said.
    Some analysts say an increase in Brazil's 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. 
    Mexico's IPC index rebounded from its lowest close
since November, climbing 1.04 percent.
    Billionaire Carlos Slim's America Movil, Latin
America's biggest telecommunications and pay TV company, rose
0.51, as it climbed for the second session in a row in a
recovery from its lowest level in nearly 4 years.
    America Movil stock has tumbled since last week when the
Mexican government proposed a sweeping bill to loosen Slim's
hold on the telecommunications market. The lower house of
Congress could vote on the bill on Thursday.
    Chile's IPSA index rose 0.59 percent. Shares of
industrial conglomerate Copec climbed 1.16 percent.
    Shares of LATAM Airlines Group fell 0.82 percent
after the company said late Tuesday that net profit dove 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 2330 GMT:
 Stock indexes                      daily %    YTD %
                           Latest    change   change
 MSCI LatAm               3,786.28     0.36     -0.3
                                             
 Brazil Bovespa          56,030.03    -0.59    -8.08
                                             
 Mexico IPC              42,497.97     1.04    -2.76
                                             
 Chile IPSA               4,457.20     0.59     3.62
                                             
 Chile IGPA              21,814.45     0.44     3.53
                                             
 Argentina MerVal         3,485.13     1.92    22.10
                                             
 Colombia IGBC           13,946.60    -0.09    -5.23
                                             
 Peru IGRA               19,852.60     0.18    -3.77
                                             
 Venezuela IBC          632,130.00     0.21    34.09
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