November 21, 2012 / 10:51 PM / in 5 years

EMERGING MARKETS-Brazil's Eletrobras plunges, Mexico stocks jump

* Brazil's Eletrobras plunges on license renewal worries
    * Chile's Soquimich drops after earnings
    * Brazil Bovespa falls 0.37 pct, Mexico IPC up 1.2 pct

    By Michael O'Boyle
    MEXICO CITY, Nov 21 (Reuters) - Shares in Brazil's state-run
electricity firm Eletrobras tumbled on Wednesday in their
biggest drop ever on fears that government meddling in prices
would erode profits, while Mexican stocks clocked their best
three-day run since June.
    Brazil's Bovespa index slipped 0.37 percent, with
the gauge slipping back toward the more than three-month low it
hit last Friday.
    Eletrobras fell 20 percent to last trade at 7.84
reais on concerns that the company's concession will be renewed
at sharply lower rates. Barclays analysts wrote that revenues
could drop by 30 percent next year, and cut their price target
on the shares to 1 real. 
    Silvio Campos, an economist with Tendencias Consultoria in
Sao Paulo, said, "we probably haven't reached the end of" the
drop in shares.
    Eletrobras preferred shares have lost nearly 60 percent of
their value since Brazil's government announced the concession
renewal terms on Sept 11.
    The Bovespa is down more than 9 percent since mid-September
amid doubts that an array of government stimulus measures is
helping the economy recover from a slowdown.
    "Foreign investors are putting less money in companies that
have government ownership," said Marcio Cardoso, a partner with
Título Corretora in Sao Paulo. State-run oil firm Petrobras
 shed 2.67 percent to close at its lowest since July.
    Further weakening of Brazil's currency against the dollar
could put more pressure on the government to allow Petrobras
 to increase fuel prices, Chief Executive Maria das
Graças Foster said on Wednesday. 
    Mexico's IPC index rose 1.18 percent on Wednesday for
a 2.7 percent gain in the last three sessions after the market
turned optimistic on fiscal negotiations in the United States,
Mexico's top trading partner.
    Volume rose to its highest this month as local pension funds
drove buying ahead of an expected drop-off in trading on
Thursday due to a holiday in the United States.
    Shares in Wal-Mart de Mexico added 1.5 percent
after data on Wednesday showed Mexican retail sales rose more
than expected in September. 
    Stronger-than-expected U.S. demand has supported Mexico in a
wider global slowdown. The IPC is trading less than 3 percent
off of a record high hit in October.
    Chile's IPSA index dropped for a second consecutive
session, losing 0.82 percent as fertilizer, lithium and iodine
producer Soquimich Comercial SA shed 4.9 percent
after posting third quarter earnings. 
    Latin America's key stock indexes at 2200 GMT:
 Stock indexes                  daily  year-t
                                    %   -date
                    Latest     change       %
 MSCI LatAm          3,547.02   -0.13   -1.53
 Brazil Bovespa     56,242.12   -0.37   -0.90
 Mexico IPC         41,668.06    1.18   12.38
 Chile IPSA          4,145.42   -0.82   -0.77
 Chile IGPA         20,408.94   -0.65    1.39
 Argentina MerVal    2,319.70    1.05   -5.80
 Colombia IGBC      14,192.94    0.29   12.06
 Peru IGRA          20,102.05   -0.44    3.23
 Venezuela IBC      383,877.5       0  228.00

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