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Latin America up sharply
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February 4, 2000: 7:00 p.m. ET
Nortel Networks soars over 11%; Brazil, Mexico stocks finish the week higher
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NEW YORK (CNNfn) - Brazilian stocks ended the week on Friday on a high note, with local and foreign investors chasing telecom, steel, and oil stocks that looked like bargains after last week's losses.
Mexican stocks had returned some of their sharp gains by the close Friday due to moderate profit-taking, but the market is poised to break all-time records next week.
The Toronto Stock Exchange's main index smashed through the 9000-point level Friday and closed even higher in a record-breaking day that was fueled by surging technology issues and galloping gold prices.
Brazil stocks soar
Brazil's benchmark Bovespa index ended 2.72 percent higher at 17,932 points, extending a two-day trend that followed a U.S. Federal Reserve move to raise interest rates by an expected 25 basis points. The move removed a factor that had been weighing the market down.
"We saw some local buyers, but also foreign funds coming in. They have to because everything looks so cheap in dollar terms," said Tomas Taterka, head of trading at Banco Cidade.
Fears that an aggressive rate increase by the U.S. Fed would suck away foreign capital toward tempting interest rates in the United States had dogged the Brazilian market over the past couple of weeks. But the Bovespa ended Friday with a seven percent gain during the week and a five percent rise so far this year.
The market basically ignored news that the cash-strapped state of Minas Gerais could default on $108 million in Eurobonds next week, a threat the federal government headed off by getting the state to agree to debt renegotiation.
The shares of telephone companies continued to be strong favorites, with a growing Internet business in Brazil helping make the now privatized firms attractive.
Telebras receipts, a basket of post- privatization telecoms shares, closed 4.2 percent higher at 260 reals and accounted for a hefty chunk of the total 1.04 billion reals ($588 million) in trade.
Brazil's main long distance company, Embratel, gained 3.9 percent to 48 reals.
But fixed-line operator Tele Centro Sul bucked the trend -- closing down 0.9 percent at 27.70 reals -- on worries about its struggle to acquire control in neighboring Cia Riograndense de Telecomunicacoes (CRT) from Spain's Telefonica. CRT also posted losses, dropping 1.74 percent to 565 reals.
But metal and petroleum producers shined, with steel maker Acesita jumping 9.35 percent to 1.52 reals and the preferred shares of heavily-weighted state oil firm Petrobras finishing 1.1 percent higher at 447 reals.
Traders said investors were shopping for companies other than electricity utilities because of concerns that price increases could be capped along with the worrying struggles for management control in some of the newly privatized firms.
Mexican market gets bullish
Mexico's key IPC index of 35 most-traded shares closed 193.44 points higher at 7236.54 after touching an intraday high of 7372.16 points, fueled by a rally on heavyweight Telefonos de Mexico. For the week, the bolsa firmed 8.84 percent and remains 1.5 percent stronger year-to-date, according to bolsa records. Friday was the fourth consecutive session of gains for the bolsa.
"The bolsa cooled a bit towards the close due to some profit-taking, but I think its rise in these two last sessions has been very strong," said Jesus Viveros, an analyst with the Bursametrica Management think tank in Mexico City.
"Short-term expectations remain positive and we don't rule out the chances the market could break record highs next week. We see resistance ... at 7500 points."
Volume on the broad Mexican market was a healthy 153.15 million shares, but below Thursday's 188.73 million when the IPC rallied 4.04 percent, it third biggest percentage gain in 2000.
The bolsa's surge in the past two days was also propelled by news that Moody's Investment Services might raise some of Mexico's credit ratings to investment grade.
A Federal Reserve decision Wednesday to increase U.S. interest rates by a quarter of a point, just as the market had expected, also took pressure off markets.
"The market outlook is good because we have more companies earnings reports coming," Bursametrica's Viveros said.
"If we take into consideration that reports already posted have been in-line overall with the consensus or above forecast, we expect this trend to continue."
Market leader Telmex (TMX: Research, Estimates), boosted by glittering quarterly results, had a weight of 28.35 percent in the IPC Friday.
Telmex L shares rose 2.05 pesos, or 7.23 percent, to close at 30.40 and the American Depositary Receipts soared 9-11/16 to 129-5/16 on Wall Street.
Telmex set all-time records at 31.20 pesos on the local exchange and 132 in New York in early afternoon trade.
Heavy demand for Telmex ADRs on the New York Stock Exchange surfaced ahead of a two-for-one ADR split Feb. 7. Last Tuesday, Telmex split the A, AA and L shares trading on the Mexican bolsa.
The stock also rose in anticipation of Telmex's Internet portal project with Microsoft Corp., traders said. Company officials told analysts during a conference call Friday morning that the announcement could come in about three weeks.
Market enthusiasm for Telmex helped spur other telecommunication stocks.
Nuevo Grupo Iusacell, Mexico's No. 2 cellular service provider, ended at the top of the percentage gains list as its V shares skyrocketed 3.60, or 21.82 percent, to 20.10 pesos, a new all-time record. The firm's ADRs rose 2-15/16 to 21-7/15 in New York.
Biper, the second paging service company in the country, closed up 0.14 peso, or 8.70 percent, at 1.75 pesos per B share.
Telecommunication investment firm Carso Global Telecom, with a 9.38 percent weight in the IPC Friday, ended 4.30 pesos firmer, or 4.12 percent, at 110.10 pesos per share after setting new life-high at 115.60 during the morning.
Next week, traders will keep an eye on inflation results for January, due Wednesday, that according to a Reuters survey should rise 1.51 percent on average.
Elsewhere in Latin America
Chilean stocks ended with solid gains on Friday, after an increase in U.S. interest rates earlier in the week cleared away an uncertainty hanging over the market recently. The IPSA index of leading stocks advanced 2.37 percent to 107.90 points, up 4.39 percent for the week. The broader IGPA index climbed 1.62 percent to 5586.74 points on Friday, when turnover reached $27.4 million.
Argentine shares also ended higher led by telecom stocks and banking issues as government measures to install order in South America's second-largest economy inspired investor confidence. The MerVal index of most-heavily traded shares ended 1.52 percent higher at 599.13 points on high volume of $41.8 million. The last time the index closed at 600 points was May 6, 1999.
Caracas stocks rose 2.11 percent Friday as investors celebrated the elimination of a 0.5 percent tax on stock transactions. Only five stocks closed higher, among them national telephone company CANTV, but that was enough to propel the IBC index of leading shares 111.68 points higher to close at 5,401.52 points.
Toronto stocks finish at record
In Toronto, the TSE 300 composite index closed up 314.81 points, or 3.54 percent, at 9209.20. It was the second biggest point gain in TSE history behind the record of 315.18 points set January 7. The TSE also set a new record for number of transactions.
Volume was 252.6 million shares worth C$4.25 billion with advancers beating decliners 625 to 539 with another 270 issues closing unchanged.
The TSE's blue-chip index the S&P/TSE 60 closed up 22.06 points, or 4.24 percent, at 542.69.
"We had the golds kick in today, that's probably the biggest story of the day," said Peter Chandler, senior vice-president of Canaccord Capital. "Combine the strength we've been seeing in that selective group of high technology companies and add this pop we've seen in gold today and that represents largely why the market is as strong as it is here."
The gold sector surged 15.73 percent as the price of bullion unexpectedly shot up to four-month highs. In New York, COMEX gold for April delivery rose $23.10 to $313 an ounce while in London, it was up $6.15 at $293.65.
In Canada, gold producer Placer Dome Inc., suspended its hedging program Friday in expectation of an improving gold market and called on other producers to rethink their policies.
Placer Dome shares closed up C$3.05 to C$15.07 while Barrick Gold gained C$2.60 to end at C$26.30.
Earlier Friday, Barrick posted flat fourth-quarter earnings of $81 million, or 20 cents a share, compared to earnings of $83 million, or $0.21 a share, in 1998.
Technology issues continued to power the index with high- flying tech companies dominating Toronto's net gainers.
The industrial products sector jumped 6.71 percent, propped up by Nortel Networks Corp. (NT: Research, Estimates), which rose 11.76 percent to close at C$171.00, up C$18.00. Nortel had touched a record high C$174.75 in earlier trading. Elsewhere in that group, Cognicase Inc. rose C$10.80 to a 52-week high of C$42.60, and C-MAC Industries Inc. gained C$10.25 to C$64.50, off a high of C$65.10 marked during the day.
"I think there's been a renewed awakening of technology stocks in our market," said Fred Ketchen, director of equity trading at ScotiaMcLeod Inc. "Maybe what you're seeing is a reexamination of high-tech and telecommunications companies in Canada based upon comparative analysis of what some of these companies are doing, for instance, on Nasdaq."
But Ketchen said he also expected there would be a correction shortly, grounding the rocketing tech issues, in light of the high valuations people are placing on stocks.
"People have become, all of a sudden, momentum players in the market and that's fine but sometimes you're going to be caught offside," said.
Also bolstering the index Friday was the utilities sector, which climbed 6.55 percent.
In that sector, BCE Inc. hit a record high of C$173.80 before slipping back to close at C$171.00, a gain of C$14.25.
BCE is rumored to be a likely candidate for a merger with Quebec cable and broadcasting company Videotron Group Ltd., which said Friday it was in merger talks with an identified party.
"Who would have ever thought that Mama Bell would become a sexy lady?" Ketchen said. "But she suddenly is very, very sexy indeed and everybody wants to be in her sleigh."
In New York, the Dow Jones industrial average fell 49.64 points or 0.45 percent to 10,963.80. But the tech-heavy Nasdaq Composite Index rose 33.16 points, or 0.79 percent, to 4244.14, surpassing its January 21 record of 4235.40.
Overall in Toronto, five of the TSE 300's 14 sub-indexes closed higher with consumer products and conglomerates rounding out the gainers.
On the downside, pipelines fell 1.84 percent, oil and gas was off 1.17 percent, paper and forestry products dropped 1.25 percent, media was off 0.99 percent and merchandising lost 1.17 percent.
"It's still very mixed, it's a very narrow market," said Canaccord's Chandler. "It's like an automobile which has many cylinders. To really get our market in gear and running smoothly you need to have more cylinders hitting than fewer. We just had another cylinder kick in today with this spurt in gold."
Chandler said he believed 10,000 was the next psychological barrier for the TSE 300 and fully expected the index to breach the 9500 mark over the next few sessions. 
- from staff and wire reports
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