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Latam bolsas see red
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November 24, 1998: 4:54 p.m. ET
Venezuela declines 4.5%; Mexico sheds 2.4%; Brazil flattens
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NEW YORK (CNNfn) - Few Latin American stock exchanges were spared Tuesday, as domestic political and economic news, as well as profit-seeking took big bites out of several equity markets in the region.
Among the major exchanges, Venezuela's bolsa turned in the worst performance, plummeting 4.5 percent on presidential poll results that discouraged investors and damaged market heavyweight CANTV.
Mexican stocks also took a beating, dropping 2.4 percent, on disappointing economic data. Brazil's Bovespa managed to pare losses, but still ended the day down 0.3 percent as investors sought to profit from recent gains.
Poll pounds Caracas stocks
Venezuelan stocks ended down 4.5 percent Tuesday led by telephone company CANTV in New York after pollsters predicted an easy victory in upcoming presidential elections for populist Hugo Chavez, traders said.
The benchmark IBC index slumped 174 points to close at 3684 points.
"The fall was due to the collapse in CANTV, based on a report which said Chavez would comfortably win the elections," said broker Jose Gregorio Tineo with Noroco.
CANTV, one of the 15 stocks that make up the IBC index, fell sharply one hour before the market's close to end down 9.4 percent at 1,165 bolivars.
"CANTV fell in the United States, people in the local market got frightened and began to sell everything," said Rafael Alcantara of brokerage Cavelba.
However, market players warned that Tuesday's volume was in line with the modest trading of recent months. A mere 2.3 billion bolivars changed hands, compared with Monday's volume of 1.96 billion bolivars ($3.4 million).
"The market has been depressed, and has already discounted a Chavez victory," said Tineo. "I don't know who was surprised by the reports and this was not a reason for anyone to sell. But the market is very weak and is very open to manipulation," he noted.
The Venezuelan stock market has been on a roller-coaster ride in recent weeks, with Monday's trade starting a new dip with a 2.3 percent loss.
With the Dec. 6 presidential elections less than two weeks away, the local market has become ever more sensitive to indications of whether Chavez will stave off a challenge from former state governor Henrique Salas.
Despite attempts to moderate his rhetoric in recent months, Chavez's plans to dissolve Congress, redraft the constitution and redirect state-owned oil company Petroleos de Venezuela continue to concern investors.
"People are worried by the quality of Chavez's advisors and the left-wing factions that support him," said Alcantara, who said that in his opinion a Salas victory could boost the stock market by 50 percent by year-end.
Inflation beats on Mexican bolsa
Mexican stocks took a big hit in afternoon trading upon the release of disappointing inflation data and continued profit consolidation in line with a slide on Wall Street.
By day's end, the leading IPC share index had dropped to the day's low, down 99.27 points, or 2.4 percent, at 4,032.18.
The country's central bank reported Tuesday afternoon that Mexico's consumer price index rose 0.97 percent in the first half of November. A Reuters survey of 11 financial houses had predicted an increase of 0.80 percent for the period.
"This number combined with the other high numbers is going to force the government to keep interest rates high and make sure the budget is austere for the next year," said Damian Fraser, an analyst at SBC Warburg Dillon Read. "High rates are bad news for equity holders."
Profit-seekers take shine off Bovespa
Brazilian shares closed little changed on Tuesday as profit-seekers sold blue chips, offsetting strong gains in second-tier shares, traders said.
Sao Paulo's benchmark Bovespa index slipped 29 points, or 0.34 percent, to 8,607 points after hitting a three-month high on Monday.
Small phone companies were the biggest gainers for a second day.
"The real standouts were companies like Cesp and Comgas that are expected to be sold next year," said Roque Sut Ribeiro, a fund manager at Banco Marka in Rio de Janeiro. "The blue chips performed poorly after gains in the last few days."
Comgas preferred surged 8.72 percent to 50 reais, while Cesp preferred rose 4.46 percent. 
-- from staff and wire reports
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