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EMERGING MARKETS-Latam stocks up on Obama "fiscal cliff" comments
December 5, 2012 / 11:41 PM / 5 years ago

EMERGING MARKETS-Latam stocks up on Obama "fiscal cliff" comments

* Obama calms investor fears with "cliff" comments
    * Electric utilities continue to whipsaw on gov't measures
    * Brazil Bovespa up 0.2 pct, Mexico IPC gains 0.19 pct

    By Danielle Assalve and Gabriel Stargardter
    SAO PAULO/MEXICO CITY Dec 5 (Reuters) - Latin American
stocks ended slightly higher on Wednesday after U.S. President
Barack Obama said a resolution to the partisan struggle over the
so-called fiscal cliff may be on the horizon. 
    After wild swings earlier in the day, Brazil's benchmark
Bovespa stock index settled up 0.2 percent at 57,678.62
points. Both Mexico's IPC and Chile's IPSA 
indexes ended the day with moderate gains.
    Speaking with a group of chief executives, Obama posted a
blunt warning to Republican opposition, saying that he would not
engage in a debt ceiling standoff. But he also offered a glimmer
of hope, predicting a "fiscal cliff" deal could be reached in a
week if Republicans played ball on taxes. 
    If U.S. politicians fail to reach a budget deal, it could
trigger up to $600 billion in spending cuts and tax hikes that
could push the United States back into recession.
    Latin American investors took kindly to Obama's words.    
The MSCI index of Latin American stocks was up
0.52 percent at 3,602.07. 
    "If they are really able to reach an agreement, it will open
up space for a recovery in global markets and the Brazilian
stock exchange will follow that movement," said Clodoir Vieira,
chief economist at brokerage Souza Barros.
    Shares of Brazil's heavily-weighted iron-ore exporter Vale
 rose 1.75 percent, supporting the index, after
China's new leader, Xi Jinping, said his government aimed to
gear economic policies in 2013 towards ensuring stable economic
    China is Brazil's top trading partner and Vale's number one
    Shares of electric utilities weighed, however, with
state-controlled Centrais Eletricas Brasileiras SA,
known as Eletrobras, down 3.17 percent and rival Companhia
Energetica de Minas Gerais SA losing 3.63 percent.
    Analysts said shares in the sector would continue to whipsaw
in coming sessions as investors struggle to arrive at an
equilibrium price after Brazil's government announced changes to
concession renewal terms.
    Vieira said that the Brazilian government's growing
involvement in the economy, and doubts about Brazil's long-term
growth, would continue to dent the Bovespa's performance. The
index has struggled to attract enough foreign funds to support
stronger gains. 
    The Bovespa has gained 1.6 percent since the beginning of
the year, compared with the IPC's 14.4 percent rise. Chile's
IPSA, meanwhile, has fallen 0.4 percent. The S&P 500 index
 rose 12 percent over the same period. 
    "Until we have new money coming into the stock market, the
 index will not rise. And this should only happen when
investors feel confident again in Brazil," Vieira said.
    Home-building firms gained for a second day after Brazil's
government announced a series of tax exemptions for the sector
on Tuesday. 
    Home-builder Gafisa SA rose 3.98 percent, while
rival Rossi Residencial SA gained 1.67 percent.
    Mexico's IPC index rose for the third straight
session, adding 0.19 percent to 42,416.29.
    Shares in homebuilder Homex fell 9.87 percent one
day after the company forecast a decline of between 23 and 24
percent in its 2013 consolidated revenue. 
    "Although is not so heavily weighted in the IPC,
this is an important fall...particularly given that in the last
few weeks it had been rallying," said Mario Copca, an analyst at
CI Casa de Bolsa brokerage in Mexico City. 
    Chile's IPSA index edged up 0.13 percent to 4149.5.
    Chile's economy will likely grow around 5.5 percent this
year, Finance Minister Felipe Larrain said on Wednesday.

    Latin America's key stock indexes at 2254 GMT:
 Stock indexes                         daily %  year-to-
                         Latest         change     ate %
 MSCI LatAm                 3,602.07      0.52     -0.01
 Brazil Bovespa            57,678.62       0.2      1.63
 Mexico IPC                42,416.29      0.19     14.40
 Chile IPSA                 4,149.50      0.13     -0.67
 Chile IGPA                20,366.31      0.12      1.17
 Argentina MerVal           2,470.04      0.45      0.30
 Colombia IGBC             14,395.64      0.64     13.66
 Peru IGRA                 20,199.39      -0.3      3.73
 Venezuela IBC            409,830.28     -0.01    250.17

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