August 31, 2012 / 5:30 PM / 7 years ago

EMERGING MARKETS-Latam stocks choppy as Bernanke sustains hope for QE3

* Bernanke fails to announce QE3, keeps expectations alive
    * Electricity firms weigh on Brazil's Bovespa
    * Bovespa slips 0.11 pct, Mexico IPC flat

    By Asher Levine and Danielle Assalve
    SAO PAULO, Aug 31 (Reuters) - Latin American stocks
whipsawed on Friday after U.S. Federal Reserve Chairman Ben
Bernanke kept the door open for a third round of quantitative
easing but stopped short of saying it was imminent.
    The MSCI Latin American stock index snapped
a 10-day losing streak, rising 0.79 percent to 3,550.36.
    Losses by electricity firms offset gains by mining company
Vale in choppy trading on Brazil's benchmark Bovespa
index, while Mexico's IPC index was flat for a
fourth day.
    In a widely anticipated speech, Bernanke said the Fed would
act as needed to strengthen an economic recovery in the United
States. Many investors took that to mean the Fed would still
consider taking action at its next meeting on September 12-13.
    "Bernanke's speech disappointed the market a bit because it
came in line with what they have been saying before, that the
Fed would do what was necessary when needed," said Joao Pedro
Brugger, an analyst with Leme Investimentos in Florianopolis,
Brazil. "But soon after, hope was reignited that the Fed would
come back in September with another round of monetary stimulus."
    The Bovespa swung widely immediately following Bernanke's
statement as investors digested the news, eventually settling
slightly lower in the afternoon. The index is on track to close
the week with a 2.1 percent loss, its worst in over three
    "The market had been moving laterally up to the speech and
that will now continue up to the Fed meeting," Brugger added.
"The U.S. election should bring a little more volatility to the
markets and we are going to remain dependent on the entry of
foreign investors."
    Brazil's energy regulator Aneel may intervene in the heavily
indebted holding company Grupo Rede Energia SA, which
controls several distressed assets in the power distribution
market, three sources with knowledge of the situation told
Reuters on Friday. 
    The move follows a government decree published on Thursday
that toughened existing rules allowing regulators to seize
operating licenses more rapidly from power utilities that fail
to meet contract requirements.
    Shares of energy distributor CTEEP plunged over 8
percent, while those of utility Eletrobras sank more
than 7 percent, as rising uncertainty about the government's
plans in the sector led investors to sell off positions.
    "Many companies have concessions that are set to expire, and
the market is seeing that this measure could extend to that
question," said Thomas Chang, with Um Investimento in Sao Paulo.
    Shares of Vale rose 1.76 percent after the company said on
Friday that it signed an agreement to sell 10 large iron ore
carriers for $600 million. 
    Mexico's IPC index traded near flat with gains by
mining firm Grupo Mexico offsetting losses by
telecommunications group America Movil.
    "(Bernanke's speech) wasn't what investors wanted to hear.
It left us with a slight hope of a relaxing of fiscal measures,
but Bernanke didn't confirm or deny it," said Rodolfo Navarrete,
with brokerage Vector in Mexico City. "The new focus will be on
economic data coming next week and the FOMC meeting in 2 weeks."
    Chile's IPSA index notched its biggest gain in over
a week, as shares of lender Banco de Chile rose 1.25
    Latin America's key stock indexes at 1642 GMT:
 Stock indexes                           daily %      YTD %
                          Latest          change     change
 MSCI LatAm                  3,550.36       0.79      -2.22
 Brazil Bovespa             57,192.85      -0.11       0.77
 Mexico IPC                 39,879.01      -0.02       7.56
 Chile IPSA                  4,133.56        0.2      -1.05
 Chile IGPA                 20,086.16        0.2      -0.22
 Argentina MerVal            2,422.57      -0.06      -1.63
 Colombia IGBC              14,080.64       0.24      11.17
 Peru IGRA                  20,225.28       0.14       3.86
 Venezuela IBC             287,999.97          0     146.08
0 : 0
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