EMERGING MARKETS-Brazil stocks up as Bernanke eases tapering fears

Thu Jul 11, 2013 10:14am EDT

Related Topics

* U.S. Fed chief says accommodative policy needed for now
    * Petrobras alters accounting methods
    * Brazil Bovespa up 1.99 pct, Mexico IPC up 1.1 pct

    By Asher Levine
    SAO PAULO, July 11 (Reuters) - Brazilian stocks rose for a
second straight day on Thursday, tracking a rise in global
equity markets after the U.S. Federal Reserve suggested its
bond-buying program may be kept in place longer than some
investors had expected.
    Mexico's IPC index erased the previous session's
losses, while Chile's bourse rose its most in nearly two
weeks.
    Fed Chairman Ben Bernanke said on Wednesday the overall
message coming from the central bank was that "a highly
accommodative policy is needed for the foreseeable future."
 
    An eventual decrease in global liquidity brought about by
the winding down of the Fed's monetary stimulus program is
expected to draw foreign investors away from riskier assets such
as Latin American equities. 
    "The world's markets woke up today because Bernanke made a
declaration that the world wasn't expecting," said Ariovaldo
Santos, a broker with H.Commcor in Sao Paulo. "The market had
been nervous recently because people were unsure about when the
tapering was going to happen." 
    Santos said recent gains do not necessarily spell the
beginning of a long-term rally for the Bovespa.
    "I am still worried about the next round of corporate
earnings, considering the slow economy and the effect of the
weaker real on some companies."
    Brazil's benchmark Bovespa stock index rose 1.99
percent to 46,388.49, breaking though technical resistance at
46,000 points which has limited gains in the Bovespa over the
previous five trading sessions.
    Shares of the most widely traded commodities firms, which
tend to attract the biggest share of foreign investors looking
for exposure to Brazilian stocks, rose.
    Preferred shares of mining firm Vale SA gained
3.25 percent, while common shares of state-run oil company
Petroleo Brasileiro SA, known as Petrobras, rose 2.9
percent.
    Petrobras late Wednesday announced a change to its
accounting method in an effort to limit the impact of a weaker
Brazilian currency on its large dollar-denominated debts.
 
    UBS Securities analyst Lilyanna Yang said in an investor
note on Thursday that the move could help increase dividend
payments for holders of common stock. 
    Brazil's Bovespa is down 24 percent this year compared to a
17 percent rise in the S&P 500 index. Few analysts,
however, have suggested stocks are at low enough levels to
warrant bargain-hunting.
    Strategists at JPMorgan Securities on Thursday lowered their
recommendation on Brazilian equities to "underweight" from
"neutral," citing overly optimistic earnings expectations, the
impact of a global economic slowdown on markets and uncertainty
related to policy implementation. 
    Mexico's IPC index posted its biggest rise in over a week,
adding 1.1 percent to 40,440.86.
    Shares of bottling group Femsa advanced 1.4
percent, contributing most to the index's gains.
    Chile's IPSA index snapped a four-day losing streak as
shares of retailer Falabella gained 1 percent.
    
    Latin America's key stock indexes at 1342 GMT:
    
 Stock indexes                            daily %     YTD %
                                Latest     change    change
 MSCI LatAm                    3,092.84      1.85    -20.04
                                                   
 Brazil Bovespa               46,388.49      1.99    -23.89
                                                   
 Mexico IPC                   40,440.86       1.1     -7.47
                                                   
 Chile IPSA                    3,760.79      0.67    -12.57
                                                   
 Chile IGPA                   18,686.81      0.52    -11.31
                                                   
 Argentina MerVal                  0.00         0   -100.00
                                                   
 Colombia IGBC                12,424.52      0.56    -15.57
                                                   
 Peru IGRA                    14,857.65      1.47    -27.98
                                                   
 Venezuela IBC                     0.00         0   -100.00
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