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Carnival for Latin stocks
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February 11, 1999: 4:55 p.m. ET
Bovespa jumps 1.5% ahead of Mardi Gras party; Mexican move stronger yet
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NEW YORK (CNNfn) - Most major Latin American markets celebrated on Thursday, with investors rallying to a rebound in Wall Street confidence and an encouraging sympathetic surge in Brazilian stocks.
Brazilian blue chips closed higher as investors took heart from signs that the country's currency instability was ending.
The Bovespa index of leading shares closed up 137 points, 1.55 percent, at 8,990.
The market rose after the naming of new central bank directors the previous day and as the currency steadied briefly on Thursday, one of its few respites since the government ended tight controls and allowed its devaluation last month.
"The bourse was already enthusiastic. ... Later, with the Dow rise, investors stepped on the accelerator a bit more," said BCN Alliance stock portfolio manager Mauro Girogi.
Trading was calm as the market grew more relaxed about the political situation, with the central government moving to isolate rebellious state leaders who set off the currency crisis by threatening to default on debts.
The federal government on Wednesday picked up the tab for international debt owed by Minas Gerais state, and ministers from the same party as Minas Governor Itamar Franco threw their support behind the central government.
"Investors are optimistic about the future of the economy and the political situation, lifted by the new central bank team and the probable favorable outcome on the question of the governors," one trader said.
Trade was expected to be light on Friday. The stock exchange kicked off a raucous Carnival party after closing on Thursday and traders said their minds were already on the five-day holiday.
Mexican shares left the Bovespa in the dirt, surging more than 4 percent on the extended strength in Brazil and a firmer peso.
The IPC index of 35 leading shares gained 166.25 points to end at 4,107.74, while the benchmark 48-hour peso advanced 6 centavos against the dollar to 9.975.
"The market is strong, supported by the strength of our currency against the dollar and by Brazil," a trader said.
Other regional markets also ended in the black, with Argentine blue chips closing up 9.71 points, or 2.54 percent, at 391.62. Chilean stocks gained 53.75 points, or 1.45 percent, to end at 3,764.09, while in Peru the benchmark IGRA general index added 10.56 points, or 0.77 percent, to 1,376.29.
Caracas awaits Chavez
However, Venezuelan stocks ended slightly weaker as investors stayed away from the market in the absence of any clearly defined economic agenda from the country's new president.
The Caracas stock exchange's IBC index closed down 25.40 points, or 0.6 percent, at 4,152.54, with 13 issues finishing unchanged, nine ending lower and two stocks rising.
Trading volume fell to 828 million bolivars ($1.4 million) from 1.1 billion bolivars ($1.8 million) on Wednesday.
Electricidad de Caracas, the market's bellwether, closed down 0.50 bolivar at 206.00 bolivars. National telephone company CANTV (VNT) finished 24 bolivars lower at 1,362 bolivars.
"Foreign investors say that Venezuelan stocks are cheap, but the rules of the game are still not clear, and the government of Chavez is still not giving a good impression," said one trader, who asked not to be named.
After a week in office, new president Hector Chavez started to outline his economic policies on Tuesday, but analysts have expressed doubt over whether he could deliver on promises to cut inflation and avoid a currency devaluation. So far, he has put forward few specifics.
In terms of book value, Venezuelan stocks are among the cheapest in Latin America, after dropping 51 percent in dollar terms last year.
-- from staff and wire reports
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