SANTIAGO, Chile, March 7 (UPI) -- Markets were solid across Latin America this week as investors on the continent took cues from promising economic reports out of the United States and followed Wall Street's climb upward. Argentina continues to weigh heavily, especially after its leaders rolled out an much-criticized tax on exporters, but hopes are high that the country's talks this week with an International Monetary Fund investigating team will be fruitful.
In line with those IMF talks in Buenos Aires, the Argentine Congress finally passed its austere budget late Tuesday, which Fund officials had said was clearly needed if aid payments are to resume to the beleaguered nation. The budget includes spending cuts of nearly 15 percent in comparison with 2001, a move that walks the tightrope between international lenders' demands and powerful protests by citizens feeling the wrenching pain of austerity in the form of joblessness and poverty.
The IMF's top negotiator with Argentina, Anoop Singh, arrived in the country for a 10-day stay Wednesday morning and met with Economy Minister Jorge Remes Lenicov. The IMF team will thoroughly examine the country's economic plan, which Argentine officials paint as meeting Fund demands to renew payment of the remaining $10 billion of the previously negotiated $22 billion aid package -- payment of which was halted in December.
While various Argentine officials have recently suggested that a new aid package may be in order, Deputy Economy Minister Jorge Todesca said Wednesday that the government will be concentrating on the here and now, "to recover the agreement interrupted at the end of last year. At this moment, we don't have on our agenda with the Fund any other amount of aid."
While Argentine officials are playing down any optimism in regard to the talks, Enrique Iglesias, president of the Inter-American Development Bank, said Wednesday that Argentina "is very close to arriving at an agreement with the International Monetary Fund."
Having Iglesias, a native of Uruguay, in its corner can only help Argentina, as the country is likely to seek some $20 billion more in combined aid from the IADB and World Bank.
While Argentina actively works to untangle itself from four years of recession and soothe markets on the continent, Latin American stocks were more enthused by the Fed's Alan Greenspan and his words last week that the United States will see recovery, as well as the Fed report Wednesday that business activity was improving in the United States, Latin America's main destination for exports.
Brazil's Bovespa stock index was mixed despite hitting an eight-month high, but overall is looking quite bullish. Stocks moved mostly to the beat of Wall Street's rhythms, continuing to shrug off any lingering worries of contagion from Argentina. Profit-taking led the Bovespa down 1.26 percent to 14,033 last Thursday, but investors remain optimistic in the wake of an interest rate cut and indications that taxes on some financial transactions could be ending.
Friday saw the Bovespa gain 2.71 percent to 14,414, its highest close since early July. Brazilian steel companies were a soft spot, as they were down on news of import tariffs in the U.S. Steel company CSN ended down 2.2 percent.
On Monday, the index was led even higher by a good day on Wall Street, ending at 14,471. Telesp Celular, the leading mobile phone company, rose 1 percent. Tuesday brought inevitable profit-taking, with the Bovespa shedding 3.18 percent to 14,011. Heavyweight phone company Telemar finished 6.7 percent lower while state oil company Petrobras lost 2.4 percent. On Wednesday, the Bovespa dropped again, this time losing 1.2 percent to 13,838.7 as Telemar lost 5.5 percent.
In Argentina, the MerVal index was mixed and captive to the political thrashings in the country, as well as the visit by an IMF team investigating the nation's economic direction. Last Thursday, the index ended up 4.8 percent at 398.25, mostly on talk Banco Galicia had found a foreign investor to bail it out of its debt. Friday brought a jump of 1.91 percent to 405.87, again on Galicia optimism. The bank rose more than 14 percent on the day.
Monday saw the MerVal dip on profit taking, closing down 8.47 percent at 371.49. Grupo Financiero Galicia, parent company of Banco Galicia, dropped hard after reports that its bailout went bust. The company dropped 24.17 percent. On Tuesday, the index was flat, closing at 370.75 as an IMF delegation landed in Buenos Aires and investors awaited any word on future aid payments. Wednesday brought a climb of 3.3 percent to 382.92 as energy company Perez Companc rose 4.2 percent.
In Mexico, the IPC was mostly up as it tracked Wall Street and Nasdaq. Last Thursday, the index was down 0.9 percent to 6,734.44. Wireless company America Movil finished 2.7 percent lower as losses on Nasdaq weighed. On Friday, the IPC rose 2.43 percent to 6,898 riding on the heels of a rally on Wall Street. Cement company Cemex jumped 4.9 percent.
U.S. markets again led the IPC higher on Monday, as it finished up nearly 2 percent at 7,029.6. America Movil gained almost 4 percent while broadcaster TV Azteca rose 3.36 percent. On Tuesday, the index finished slightly up at 7,053 as profit taking on Wall Street dampened the day. Media company Televisa rose 1 percent as Bear Stearns gave the stock nods.
Wednesday brought a gain of 1.4 percent to 7,154 as industrial group Alfa gained 6.4 percent. The group has steel subsidiaries, which helped push its stock higher as Mexico still won't face the 30 percent U.S. tariff on steel imports.
In Chile, the IPSA index was mostly up for the week, taking a break from its worries on Argentina to ride Wall Street's gains. Last Thursday, the index finished 0.53 percent higher at 96.73 as U.S. gross domestic product was reported much higher than expected in recent months. Friday saw a gain to 97.77 as the energy sector soared. The IPSA climbed to 99.73 Monday, led by demand in the United States for Chilean American depository receipts, such as energy concern Enersis, which gained 6.7 percent. Tuesday saw the index drop slightly to 99.69, though financial groups did fine, with Banco de Chile gaining more than 6.5 percent.
The IPSA gained 1 percent to 100.6 Wednesday, led higher by Wall Street. Steel producer CAP jumped more than 3 percent on reports that the Chilean government may impose tariffs on steel imports after the U.S. decision to do the same.
Venezuela's IBC index was mixed for the week. Last Thursday saw a close at 6,958.4, then a jump to 7,015.5 on Friday. Monday brought a drop to 6,978.83, with another decline to 6,940.6 on Tuesday. Wednesday was another losing day, with the index finishing at 6,938 as Electricidad de Caracas fell 2 percent.
