SAO PAULO, May 9 (UPI) -- To be an investor anywhere but Latin America this week -- that surely was the sentiment of those with money in the emerging markets across the region.
Indexes were limp everywhere and good news a scarcer sight than a dollar bill in downtown Buenos Aires.
Argentina's troubles remain and might as well be recorded and played for investors time and time again, as unchanging as they seem. But in Brazil, South America's largest economy, what was once a happy tune of hope is morphing into a cacophony of political discord and economic war drums in the form of looming trade disputes.
Brazil's present plight is at root a political one, with a heated race for October's presidential elections frightening all concerned. The market's bogeyman, Workers Party leader Luiz Inacio "Lula" da Silva, is stretching his lead over more business-friendly candidates, climbing near 40 percent in the polls. Despite Lula's recent easing on talk about reversing privatization and huge jumps in taxes, investors are scared.
There is an old adage for this situation: "If it looks like a duck, acts like a duck and sounds like a duck, it must be a duck." For market players, Lula will never be able to shrug off his political past, and to most he will forever have the distinct quack of a socialist.
It is still early for a Brazilian election, especially considering that before the vote there is a small event called the World Cup that has the complete attention of this land where soccer is king. Nonetheless, Lula's fortunes continued this week as a new scandal surfaced to threaten the campaign of Jose Serra, the more market-palatable candidate now running second in polls. Serra has been implicated for financial misdeeds involving the sale of mining-giant Vale do Rio Doce and kickbacks his former campaign treasurer allegedly received in the deal.
An earlier investigation into the financial dealings of Roseana Sarney and her husband killed her campaign for the presidency. She was once a front-runner and the great hope of the center right, who saw her as the best chance at furthering reforms.
As for the markets, last Thursday brought the Bovespa index its largest one-day drop in a year, as it fell 4.2 percent to 12,538 after news the country's debt was being downgraded by Morgan Stanley and Merrill Lynch. Banking giant Bradesco lost 4.6 percent after reporting a weak first quarter. On Friday, the Bovespa slid to 12,488 with investors still reeling about the debt downgrades and fretting over political uncertainty ahead the presidential election.
Monday brought a 1.4 percent drop as politics continued to spook market players. The weekend report regarding alleged irregularities around Serra kept a cloud over the market. The Bovespa previously dropped Tuesday, with worries about inflation and a rising risk rating for the country spoiling the day. Bradesco bucked the trend, rising 2.3 percent. Wednesday the Bovespa finally had a winning day, rising 2.22 percent. State-run oil company Petrobras gained more than 3 percent while phone giant Telemar rose 2.6 percent.
In Mexico, the IPC ended last Thursday flat at 7,486.42. Profit taking sent shares of wireless giant America Movil down 1.8 percent. Friday brought a rise, despite a drop on Wall Street and bad news on U.S. job data. America Movil bounced back, gaining 2.5 percent, while fixed-line phone operator Telemar gained 0.6 percent. On Monday, the index was the rare bright spot, though just barely, in Latin America. The IPC ended up at 7,542.48 in light trade.
Tuesday saw the IPC drop 1.5 percent to 7,431.89, as America Movil lost ground. Burgeoning worries about political deadlock between President Vicente Fox and Congress weighed on investors. Wednesday brought a jump of 1.16 percent to 7,517.84 in a day that saw no big gainers. The largest loser, though, was cement manufacturer Cemex, which ended down 1.33 percent.
In Argentina, the MerVal finished last Thursday 5.5 percent higher, mostly buoyed by a weakening peso. The index moves inversely to the peso, as investors place their money in blue chips rather than let it wilt as the peso flounders. Friday saw a drop to 405.84 with the ever-present worries about an agreement with the IMF. Steel company Acindar dropped hard, losing 5.1 percent.
The MerVal rose slightly to 407.46 on Monday in light trade then fell almost 2 percent to 399.88 Tuesday. Investors were vexed by the continuing battle between President Eduardo Duhalde and lawmakers over key changes in the country's legal system that the IMF is demanding. Wednesday brought a drop to 397.66 as losses in Grupo Financiero Galicia of 2.15 percent sent the market down.
In Chile, the IPSA rose slightly to 96.51 Thursday as utilities led the way. Enersis gained 1.7 percent. On Friday, the index dropped to 96.43 as most investors remained sidelined with little news of note. Monday brought another flat day with the IPSA ticking up to 96.53 to end at 96.64 on Tuesday. Wednesday, the index rose to 97.06 as Banco Santander Chile gained nearly 2 percent.
In Venezuela, the IBC was flat Thursday before falling 1.3 percent Friday. Monday brought a rise to 6,656.56, while the index was down Tuesday with a close at 6,527. President Hugo Chavez's changes to top economy officials failed to impress investors.
