By Carla Mozee
Latin America's equity indexes fell Wednesday, weighed down by
losses in material stocks and investor uncertainty about the U.S.
financial system as it enters a new phase of government
scrutiny.
Brazil's Bovespa fell 1.2% to 38,231.58. Trading in Sao Paulo
was closed on Monday and Tuesday for the Carnaval holiday.
Mexico's IPC lost 0.5% to 18,200.70. Chile's IPSA fell 0.3% to
2,538.01, and Argentina's Merval slumped 2.1% to 1,009.80.
The benchmarks finished off their lows of the session, tracking
an attempt by Wall Street to climb out of the red. The S&P 500
Index (SPX) and the Dow Jones Industrial Average (DJI) bounced off
their lows, but each finished down 1.1%.
Stocks were under pressure as the U.S. Treasury Department began
assessing capital injections into the country's 19 largest banks
based on a so-called stress test. Regulators are looking at each
financial institution's balance sheet, evaluating how much capital
will be needed over the coming two years.
Investors in Latin America also received another piece of poor
economic news from the U.S. on Wednesday, with sales of existing
homes dropping 5.3% in January, the lowest sales pace in 12
years.
The health of the financial systems and economic conditions are
important to Latin America, particularly for Mexico, which counts
the U.S. as its biggest trading partner.
Among volume leaders, shares of Brazilian oil giant Petrobras
(PBR) gained 3.2%, tracking a 6% jump in crude-oil prices to $42.50
a barrel on the New York Mercantile Exchange. Crude for April
delivery surged following a report that weekly U.S. gasoline
inventories fell by more than expected.
Mining giant Vale (RIO) shares dropped 4.6%, extending losses
since the company last week posted a 47% decline in fourth-quarter
profit. Gerdau (GGB) shares fell 2.8%, CSN (SID) lost 4.9%, and
Usiminas fell 0.8%.
Itau (ITU) and Unibanco (UBB) shares each fell 1.1% after the
newly merged Itau-Unibanco Multiplo posted a 16% profit decline to
7.8 billion reals ($3.28 billion) for the fourth quarter, and said
loan provisions, or funds set aside to cover bad loans, rose 3.43
billion reals, up from 2.09 billion in the same period a year
ago.
Shares of Redecard reversed earlier declines, and rose 3.9% to
25.66 reals. Citigroup Inc. (C) plans to shed its stake in the
credit-card processor, according to a Redecard filing with
Brazilian regulators, which is also available on the company's web
site. The offering's size wasn't disclosed. Citi, which is among
the U.S. banks that has received industry bailout funds from the
government, currently owns a 17% stake in Redecard.
Itau Unibanco Multiplo reportedly said Wednesday that it's not
likely to buy the stake from Citi.
Shares of other interest-rate sensitive banking stocks finished
higher. Banco do Brasil rose 1.9%, Banco Bradesco (BBD) rose 2.4%
and Banco Nossa Caixa rose 0.2%.
Analysts polled by the central bank continue to expect consumer
prices to move lower this year, according to a survey released
Wednesday. The survey's release was delayed by two days because of
the holiday.
Analysts now expect the benchmark inflation measure to fall to
4.66%, down from 4.69% last week. The upper end of the central
bank's inflation target is 6.5%. The projection for the key Selic
rate slipped to 10.38% from 10.50% a week ago. The Selic now stands
at 12.75%, and is expected to be cut when policymakers meet next
month.
In Argentina, shares of steel tube maker Tenaris (TS) fell 5.1%
ahead of the release of quarterly results. After market close, the
company said its fourth-quarter profit tumbled 81% to $114.5
million, or 16 cents per American Depositary Share.
The company cited the decline on impairment charges of 85 cents
a share related to its purchase of Maverick Tube Corp. Sales at
Tenaris increased 23% to $3.24 billion.
Shares of Mexican mining company Industrias Penoles fell 8.2% a
day after the company swung to a fourth-quarter loss of 1.42
billion pesos ($94.9 million).