SAO PAULO, Aug 26 Brazil's Bovespa stock index
briefly touched its highest level in more than a year
and a half on Tuesday, driven by rising expectations that
President Dilma Rousseff could lose her bid for re-election in
October, although the market edged lower later in the session as
investors took profits.
The broader MSCI Latin American stock index
rose for the eighth session in nine, while most of South
America's currencies strengthened.
Brazil's stock market has rallied for nearly two weeks as
electoral polls showed a surge of support for opposition
candidate Marina Silva that made it near certain that Rousseff
would not win an outright re-election on Oct. 5.
Many investors have criticized Rousseff for mismanagement of
the economy and for enacting policies detrimental to minority
shareholders of state-run companies such as oil producer
Petroleo Brasileiro SA, known as Petrobras.
Preferred shares of Petrobras have risen more than 20
percent over the past eight sessions and briefly traded at their
highest price in nearly two and a half years on Tuesday before
settling slightly lower in the afternoon.
"Investors in Brazil remain focused on presidential
elections and its potential impact on equities," Bank of America
Merrill Lynch analyst Felipe Hirai wrote on Tuesday. "As recent
polls indicated Marina Silva could be a very competitive
candidate, even beating incumbent President Dilma in an eventual
2nd round, the market seems to be increasing the chances of an
The next electoral poll is expected to be released later on
Tuesday, followed by another on Wednesday, and investors are
betting they will show Rousseff losing ground.
Bank shares also weighed on the Bovespa index after data
showed growth in loan books slowed for a sixth straight month in
July while delinquencies rose.
In currency markets, the Brazilian real strengthened
against the dollar following four straight days of declines.
Traders said expectations for the polls helped support the
real, as a non-Rousseff government would likely reduce the
country's risk profile among global investors.
Elsewhere in Latin America, the Colombian and Mexican pesos
both gained about 0.35 percent against the dollar.
Colombia's central bank will likely raise interest rates for
a fifth straight month on Friday as policymakers see the economy
having reached its potential growth level, according to a
Reuters survey on Monday.
Key Latin American stock indexes and currencies at 1543 GMT:
Stock indexes daily % YTD %
Latest change change
MSCI Emerging Markets 1087.52 0.21 8.24
MSCI LatAm 3564.22 0.09 11.25
Brazil Bovespa 59562.25 -0.29 15.64
Mexico IPC 45610.85 0.23 6.75
Chile IPSA 3956.24 0.27 6.95
Chile IGPA 19263.32 0.22 5.69
Argentina MerVal 9393.149 0.11 74.24
Colombia IGBC 14404.08 0.01 10.20
Peru IGRA 17023.15 -0.04 8.06
Venezuela IBC 2572.17 -0.03 -6.01
Currencies daily % YTD %
Brazil real 2.2723 0.78 3.72
Mexico peso 13.1032 0.34 -0.56
Chile peso 585.5 -0.44 -10.15
Colombia peso 1926.49 0.43 0.29
Peru sol 2.832 0.07 -1.38
Argentina peso (interbank) 8.4050 0.00 -22.75
Argentina peso (parallel) 14 -0.14 -28.57
(Reporting by Paula Laier and Bruno Federowski; Writing and
additional reporting by Asher Levine; Editing by Grant McCool)