|
Caracas stocks fly high
|
 |
December 9, 1998: 4:57 p.m. ET
Venezuelan bolsa leaps 19%, Mexico's adds 0.7%, but Brazil's slips 0.7%
|
NEW YORK (CNNfn) - Domestic politics and economic data continued to drive stocks on the Latin American bolsas Wednesday, with euphoric results in Venezuela. Stocks there leapt another 19 percent on optimism about President-elect Hugo Chavez' policies.
In Brazil, optimism over a government vote on social security reform played a part in paring losses on the Bovespa index, which closed down 0.7 percent after falling more than 2 percent earlier in the day.
And in Mexico, the bolsa moved up 0.7 percent after the release of inflation and revised trade-balance figures.
Venezuelan stocks extended their historic 22 percent rally Tuesday by gaining a further 19 percent Wednesday, as euphoria continued over the moderate message of President-elect Hugo Chavez.
Brushing aside further softness in the price of oil, the leading IBC index closed up 930 points, or 19.4 percent, at 5,720.
Traders enthused over the pledges of support from two traditional political parties -- Democratic Action and Copei -- for Chavez's proposal to dissolve Congress and redraft the constitution. That was seen as lessening the chance of political conflict when the new government starts its five-year term on Feb. 2.
The market also reacted warmly to Chavez' comments that he was willing to maintain the current "shadow" agreement with the International Monetary Fund and tackle tough issues such as high government spending and inefficient tax collection.
"The market is going up because Chavez has clarified many things which were in doubt," said Eduardo Franco, broker with Profimerca.
Trade volume climbed to a record for the year at 10.2 billion bolivars (U.S. $18.1 million), compared with Tuesday's 5.4 billion bolivars (U.S. $9.5 million).
Although some brokers noted cautiously that after gaining roughly 40 percent in the last two days the market was due for a period of profit consolidation, the general feeling was that the optimistic mood could extend into the immediate future.
As usual, the market was driven by benchmark stock Electricidad de Caracas, which closed up 56.5 bolivars a share, or 25.3 percent, at 280 bolivars a share. This follows a massive increase of 29.9 percent in the price of Electricidad on Tuesday.
Bovespa slips on liquidity
Brazilian stocks ended weaker, pressured by sales from international investors who took advantage of increased liquidity in the market, traders said.
"There was selling pressure from foreigners throughout the day," said one trader. "Optimism over today's congressional voting on the social-security decree boosted liquidity, which in turn gave an opportunity to those who wanted to sell."
The blue-chip Bovespa index ended down 56 points, or 0.74 percent, at 7,573 points on volume of about 400 million reais (U.S. $333 million).
Brazil's Congress was due to vote later in the day on a piece of the government's ambitious social-security reform program that could charge nonprofit groups for pension contributions.
It will be the first vote since the lower house of Congress rejected last Wednesday a key measure that would have boosted pension income for retired civil servants. The defeat sent stocks tumbling.
Today, optimism that the government may pass the measure helped the Bovespa rise as much as 1.89 percent. But international investors doused the fire of those rallies, traders said.
Mexican stocks beat off loss
Mexican blue-chips stocks reversed direction and posted moderate gains as investors reacted to market-friendly November inflation data, dealers said.
The leading IPC index of 35 stocks closed up 25.99 points, or 0.69 percent, at 3,805.52. Volume was moderate at 69 million shares.
"The inflation figures came out very well and that's good news for the market," said one trader. "Volume was very low, but with inflation lower than expected it helped the market at the end of the session."
Mexico's central bank reported the consumer price index rose 1.77 percent in November against 1.43 percent in October. The bank also said the producer price index rose 1.40 percent in November versus 2.03 percent the month before.
Separately, the Finance Ministry reported that Mexico's revised trade deficit for October was $798 million, some $20 million less than the government's preliminary figure of $818 million.
The ministry said the downward revision was largely due to export operations in the automobile industry.
A lack of news regarding a possible resolution to the controversy over the Fobaproa bank bailout fund was negatively affecting the market, keeping a lid on gains, traders said.
"Caution will prevail while the market waits for some more clear news about how the negotiations over Fobaproa are advancing," said Esteban Rojas, deputy director of analysis for brokerage Arka.
Elsewhere in the region
Other Latin American bolsas ended the day in the red. Stocks in Chile dropped 71.89 points, or 1.93 percent, to finish at 3,645.37. On Peru's exchange, shares closed down 7.95 points, or 0.56 percent, at 1,423.33. And Argentina's Merval index fell 6.63 points, or 1.46 percent, to 446.31. 
-- from staff and wire reports
|
|
|
|
|
 |
|
