By Carla Mozee
Brazilian and Mexican equities dropped Wednesday, with an ease
in concerns about a liquidity crisis for euro-zone banks unable to
sustain gains on the final day of a tumultuous second quarter for
regional markets.
Brazil's Bovespa fell 1.7% to 60,935, the lowest close since
late May. Mexico's IPC lost 1% to 31,156.97, its third losing
session in a row.
The indexes tracking the largest- and second-largest equity
markets in Latin America fell 13% and 6.3%, respectively, for the
second quarter that was rife with investor worries about the impact
of a euro-zone debt crisis on the global recovery process.
The Bovespa's quarterly loss was its first since a 24% plunge in
the fourth quarter of 2008. The IPC posted its first loss since the
first quarter of 2009 when it dropped 12%.
On Wednesday, weaker-than-anticipated demand for three-month
loans offered by the European Central Bank to euro-zone banks had
helped calm U.S. and Latin American equities after selloffs in the
previous session.
But the markets were hit by late-session declines, with a report
about tepid job growth in the U.S. private-sector arriving ahead of
Friday's monthly employment figures.
Economic recovery worries were underscored Tuesday when the
Bovespa and the IPC each lost more than 3% after private research
group the Conference Board cut its leading indicator index for
China. The move spurred fears that conditions in the world's
largest emerging economy are faltering and may contribute to a
double-dip recession.
China is a key consumer of products offered by countries
throughout Latin America, such as iron ore from Brazil and copper
from Chile.
In Sao Paulo Wednesday, heavily weighted steel stocks turned
lower amid broad-based losses. Shares of market heavyweight Vale
(RIO) fell 2.9%. The iron ore giant's shares dropped 23% on a
quarterly basis, their worst performance since the last quarter of
2008.
Shares of pulp and paper provider Fibria Celulose (FBR) fell
2.7%, and finished the second quarter as the worst price performer
on the Bovespa, with a slide of 31%. Retailer Lojas Renner notched
the strongest gain over the three-month period, rising 20%.
Preferred shares of Petrobras (PBR) clung to a 0.1% gain on
Wednesday as the state-run oil giant ended the quarter with news
that Brazil's President, Luiz Inacio Lula da Silva, has signed into
law a long-awaited capitalization plan for the company.
The law will allow the government to grant to Petrobras rights
to explore and develop up to 5 billion barrels of oil equivalent in
the sub-salt region in offshore Brazil. In exchange for the rights,
the government will receive new shares in Petrobras. Estimates for
the value of the share sale have run as high as $60 billion. The
sale is currently expected to launch in September, as a related
valuation of Brazil's oil reserves needs to be completed by the
country's oil regulator.
Uncertainty surrounding the deal prompted investors to push
Petrobras' preferred shares down 24% for the quarter, their
sharpest loss since the fourth quarter of 2008.
Meanwhile, shares of Vivo Participacoes (VIV) reversed course to
end 1.9% lower, leaving them with a 3.9% quarterly decline. Battle
for control of the largest wireless services provider in Brazil
ramped up Wednesday. The Portuguese government blocked Portugal
Telecom (PT) from selling the company's stake in Vivo to Spain's
Telefonica (TEF).
Portugal Telecom and Vivo are currently joint venture partners
in Vivo. The move on behalf of the Portuguese government was
unexpected as Telefonica late Tuesday sweetened its bid for
Portugal Telecom's stake in Vivo for the third time, to 7.15
billion euros, or about $8.8 billion.
Quarterly roundup
In Mexico City, shares of corn flour and tortilla producer Gruma
(GMK) led quarterly decliners on the IPC with a 28.6% drop, while
retailer Comerci topped advancers with a gain of 15%. Only four of
the 35-listed shares on the IPC ended higher for the quarter.
Argentina's Merval fell 0.4% to 2,185.01 on Wednesday. It posted
a second-quarter decline of 8%, logging its first quarterly loss
since the fourth quarter of 2008. The index of 15 stocks saw
heavyweight Tenaris' (TS) shares drop 17% during the three-month
period. Also, locally traded shares of Brazil's Petrobras fell
19%.
Chile's IPSA index finished the day with a 0.3% fall to
4,065.29. But a string of closes at record highs left the index up
8% for the second quarter period, easily outpacing its regional
rivals.