RIO DE JANEIRO, April 10 (UPI) -- Stock markets across Latin America were up this week as investors sensed the tide turning for coalition forces in Iraq, and digested various bits of good news on the domestic front.
"The progress of the war in Iraq has certainly been the main driver of markets," said Jose Canas, an analyst with IdeaGlobal in Miami. "That progress lifts a burden for the markets."
Nowhere has optimism been more pronounced than in Brazil, the region's biggest economy, which was expected to take the brunt of a fallout among emerging market economies should the war in Iraq drag on longer than expected.
Analysts feared that if oil prices stayed above $40 a barrel for any extended period of time, Brazil would see inflation jump and its debt scenario creep back toward the edge of default.
Ironically, it is the very pitiful state which Brazilian equities were in for the past year that is now seen as weighing in the country's favor.
"Because Brazilian equities were so beaten down prior to this year, we see that as a major incentive right now for foreign investors because valuations are pretty low," Canas said.
Domestically, Brazilian investors have been cheered by progress the young government of President Luiz Inacio Lula da Silva is making in pushing tough reforms of the legal, tax and pension systems through Congress.
"Now that the war looks like might be over soon, we believe that investors are going to turn to fundamentals," Canas said of the Brazilian market.
"We expect gains (in Brazil) to be sustainable throughout the year, and we're expecting gains of 25 percent for this year."
Latin American equities as a whole saw better liquidity for the first quarter, as compared to the previous year.
According to Economatica, Latin America's biggest exchanges averaged $225.1 million a day in turnover during the first quarter 2003, as compared to $222.5 million a day the previous year.
While analysts point out that any comparison to the horrid 2002 Latin America experienced is bound to show some improvement, investors are taking heart nonetheless and are hoping markets will swing through the year with gains all around.
As for the markets, Brazil's Bovespa stock index ended last Thursday up 1.1 percent to 12,006 as the country's Congress passed legislation that could lead to central bank autonomy. Investors were also cheered by falling inflation for March. Electricity company Eletrobras rose more than 7 percent.
Friday brought an increase of 0.5 percent to 12,066 as investors gained confidence that Brazil was going to weather the war in Iraq. Banks led the way, with Bradesco gaining 3.5 percent, and Banco Itau up 4.6 percent.
On Monday the Bovespa rose again, this time to 12,136 as investors stayed above the important psychological mark of 12,000. Optimism on both the foreign and domestic fronts ruled the day, as U.S. troops were poised to take Iraq and the local currency hit its strongest close in eight months. Long-distance carrier Embratel gained almost 5 percent on news that it had successfully renegotiated some $860 million in debt.
Profit taking took its toll on Tuesday, as the Bovespa dropped 3 percent to 11,779 after gaining 8 percent the previous five sessions. Embratel lost 5 percent, energy company Copel slipped 9.8 percent.
On Wednesday, the index slipped slightly to 11,759 as investors continued to take profits. Bradesco dropped 1.9 percent, Banco Itau lost 1.4 percent, while cellular company Telesp bucked the day's trend and rose 3.58 percent.
In Mexico, the IPC index finished Thursday up 0.44 percent at 6,035, with cellular provider America Movil up 1.48 percent in heavy trade. Wal-Mart de Mexico, or Walmex, gained 1.85 percent.
On Friday, the IPC gained 2 percent. Broadcaster Televisa gained 1.5 percent.
The IPC gained 1.6 percent to 6,257 on Monday as investors sensed inevitable victory for coalition forces in Iraq. America Movil gained more than 2 percent. Fixed phone line Telmex added 1.7 percent.
Four days of gains led to a flat close Tuesday, as the IPC ended at 6,259. America Movil gained again, adding 1.26 percent. Telmex added 1.14 percent.
Wednesday saw a loss of 0.76 percent to 6,212. Telmex lost 1.66 percent, food maker Bimbo shed 1.9 percent and cement maker Cemex lost 1.16 percent.
Chile's IPSA stock index gained 0.33 percent to 1,016 Thursday on light trade. Investors remained sidelined Friday, with the index gaining to 1,019. Traders said they were waiting for a decisive moment in Iraq before diving back into the equity market. Airline LanChile gained 1.3 percent on the day.
Monday brought some optimism, with the IPSA gaining to 1,026. Brewer CCU gained nearly 2 percent, while telecom Telefonica added 1 percent. Utility Enersis added 1.4 percent.
The IPSA lost slightly to 1,025 Tuesday in light trade, then closed up 0.62 percent at 1,032 Wednesday.
Argentina's Merval stock index ended last Thursday up 0.6 percent at 565, then gained to 569 Friday. Monday brought a loss of 0.2 percent to 568, then the index dropped again Tuesday to 567.
On Wednesday, the Merval ticked down to 564.6. Steelmaker Acindar gained 2.46 percent, while energy company Perez Companc lost 1.94 percent.
In Venezuela, the IBC index ended last Thursday slightly up at 8,626. The index then dropped to 8,607 Friday.
Monday brought a loss to 8,492 for the IBC, when closed Tuesday flat at 8,493. On Wednesday, the index rose 0.28 percent to 8,516. National telephone company CANTV -- which makes up 40 percent of the IBC -- gained 1 percent.
