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EMERGING MARKETS-Latam stocks slide, Brazil hit by tax jitters
Posted on April 7, 2011
S&P 500 index edges higher on light volumeWed, Apr 6 2011Europe stocks extend rally as banks play catch-upWed, Apr 6 2011S&P hovers near resistance, but volume still weakTue, Apr 5 2011EMERGING MARKETS-Latam stocks hit 2-1/2 year, pullback seenTue, Apr 5 2011EMERGING MARKETS-Latam stocks rise to highest since NovMon, Apr 4 2011 Analysis & Opinion Welcome to MuniLand March 2011 earnings preview: Another solid quarter Related Topics Stocks » Global Markets » Stocks
Wed Apr 6, 2011 5:42pm EDT
* Regional indexes bounce off key resistance levels
* Fears of tax on foreign stock buying weigh on Brazil
* Brazil Bovespa off 1.15 pct, Mexico IPC up 0.08 pct (Recasts, adds comments, updates to close)
By Luciana Lopez
SAO PAULO, April 6 (Reuters) – Latin American stocks fell on Wednesday, as investors in Brazil feared the government could raise a tax on foreign investment in equities as part of its battle to rein in currency gains.
The MSCI Latin American stocks index .MILA00000PUS lost 0.29 percent, falling off its highest level since June 2008.
Brazilian Finance Minister Guido Mantega called a press conference for after market close to discuss measures to control the country’s overvalued currency.
Some investors speculated the government could increase a tax on foreign purchases of local equities.
“There’s some worry about the measures that Minister Mantega could announce,” said Newton Rosa, chief economist for SulAmerica Investimentos in Sao Paulo.
Brazil has been trying to contain gains in the real through a host of measures, but the currency has continued to gain ground against the dollar.
Brazil’s benchmark Bovespa stock index .BVSP shed 1.15 percent to 69.036.91 points after a 6-day rally that added 3.9 percent.
The index broke above the psychologically key 70,000 level, but pulled back to the 69,000 level that analyst said could act as support.
“Above 70,000 points we haven’t had a lot of buyers,” said Otavio Vieira, director of investments at Safdie in Sao Paulo.
The index has struggled to advance this year, with foreign investors pulling away from emerging market equities.
“What we’ve been seeing is markets in developed countries performing well compared to emerging economies,” said Guilherme Sand, a fund manager with Solidus Corretora in Brazil who helps oversee about 900 million reais in assets.
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S&P 500 index edges higher on light volumeWed, Apr 6 2011Europe stocks extend rally as banks play catch-upWed, Apr 6 2011S&P hovers near resistance, but volume still weakTue, Apr 5 2011EMERGING MARKETS-Latam stocks hit 2-1/2 year, pullback seenTue, Apr 5 2011EMERGING MARKETS-Latam stocks rise to highest since NovMon, Apr 4 2011 Analysis & Opinion Welcome to MuniLand March 2011 earnings preview: Another solid quarter Related Topics Stocks » Global Markets » Stocks
Wed Apr 6, 2011 5:42pm EDT
Shares of mining giant Vale continued to see high-volume trade after the company this week named a successor to outgoing chief executive Roger Agnelli. [ID:nN04294281]
The company’s preferred stock (VALE5.SA) saw the highest volume in the index and slipped 0.91 percent.
Mexico’s IPC index .MXX pulled back from early gains to close nearly flat, up 0.08 percent.
The index failed to gain past resistance near 38,100 points. If stocks cannot overcome the level in the coming days, more investors could start to take profits on a nearly 7 percent rally since mid-March, analysts said.
Among rising stocks, shares in Banorte (GFNORTEO.MX) added 1.82 percent. Shares in broadcaster Televisa (TLVACPO.MX) shed 2.88 percent after media reports that it will buy a 50 percent stake in mobile operator Grupo Iusacell. [ID:nN06250154]
Chile’s IPSA index .IPSA rose 0.34 percent to 4781.66 points, gaining ground for the sixth session.
However, stocks pulled back from resistance at 4,800 and the index’s relative strength index suggested the IPSA could be overbought, leaving the rally with little steam. The RSI is used in technical analysis to gauge an asset’s momentum.
A drop of 1.88 percent in retailer Cencosud CEN.SN limited gains.
Shares in shipping company Vapores VAP.SN rose 13.27 percent after Quinenco QNN.SN, the Luksic family’s holding group, bought a second $120 million stake in Vapores. [ID:nN06237840] (Additional reporting by Brad Haynes in Santiago and Michael O’Boyle in Mexico City; Editing by Diane Craft)
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