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Latins greet 1999 mixed
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January 4, 1999: 4:51 p.m. ET
Brazilian stocks soar but profit-taking, stronger peso sinks Mexican shares
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NEW YORK (CNNfn) - Latin American stock markets greeted the first trading day of 1999 with mixed enthusiasm Monday, with Brazilian stocks enjoying the only breakaway rally.
The Brazilian market ended up 2.3 percent on Monday on elation over the latest series of government belt-tightening measures, traders said.
"Confidence is growing that the government really is committed to bringing the economy under control and will ensure that the necessary measures are taken," a trader at a local brokerage said.
Sao Paulo's key Bovespa index closed up 158 points at 6,942.
Stocks were also boosted by strong gains in European bourses and on Wall Street which was trading up 0.2 percent when Brazil's market closed.
In a bid to plug a hole in its coffers after Congress rejected a key pension reform and delayed voting on another crucial measure, the government announced Wednesday that it would boost a financial operations tax and take other steps.
"From the macroeconomic point of view, the 'little package' is positive to meet the cash needs of the government," a trader at a local brokerage said.
The Mexican bourse extended early losses amid slow New Year's trade as cautious brokers took profits from the prior week's gains.
"The market is completing a correction and affirming a floor level. Despite the erratic, lazy movement and thin volume, it could rebound once it reaches 3,900," a technical analyst said.
The leading IPC share index tumbled 123.93 points, or 3.13 percent, at 3,835.73. Volume was wafer thin at 18.8 million shares.
Traders attributed the fall to abiding economic worries in an otherwise glacial news climate.
"They're still on vacation, there are no investors in the market, they have yet to buy positions," a desk trader said.
Benchmark stock Telefonos de Mexico ceded 0.60 pesos to end at 23.80 while its American depositary receipts (TMX) rose 1/2 to 49-3/16.
Dealers said an early advance by the peso currency against the dollar had sparked a wave of arbitrage trading in Telmex stock, with investors selling local shares in Mexico and buying ADRs in New York.
Traders said the market was indifferent to Wall Street's morning gains and swift afternoon sell-off.
Elsewhere in the region, Venezuelan stocks mirrored the Mexican retreat, with Caracas' IBC index shedding 67.91 points, 1.42 percent, to close at 4,720.77.
Volume recovered to a healthy 3.7 billion bolivars ($6.5 million) Monday, compared with 460 million bolivars ($815,000) last Thursday.
"Prices are back on track. The stock market fell back Monday in a technical adjustment after some stocks closed 1998 higher," said Carlos Lupini of Incambios Valores.
He noted that the stock market typically ends the year strongly as many investors move to balance their books.
Alfredo Do'Nacimento of Financorp noted that the market was still awaiting the appointment of President-elect Hugo Chavez' top ministers to his economic cabinet. Chavez, who will take office on Feb. 2 has yet to name his finance minister, oil minister or the president of the central bank.
Other Latin markets were firmer. Peru's IGRA ended the day at 1,340.07, gaining 4.19 points or 0.31 percent, while Chilean blue chips advanced 11.94 points, 0.33 percent, to 3,606.69.
Argentine investors showed renewed confidence in Brazil's economic measures by buying undervalued shares in Buenos Aires.
"All emerging markets are keeping close tabs on Brazil. For the moment, this rise is a vote of confidence in their Congress," said trader Daniel Costantino at Banco Privado.
The MerVal index of most-traded shares closed 0.76 percent higher at 433.36, a 3.3 point rise. Volume grew over the prior week but was still a small 27.2 million pesos.
"Some prices are ridiculously low," said trader Alejandro Silverya at Capital Markets Argentina. 
-- from staff and wire reports
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