NEW YORK, Feb. 3 (UPI) -- Equities were up in Latin America this week, as confidence on the domestic front was seen in most countries.
Stocks across the region -- and the emerging-market world in general --steadily climbed in the final part of January, but some analysts are beginning to doubt whether the gains will hold.
Mexico, for instance, ended the month at a historic high while Brazil continued to see big gains.
But it is unlikely that the stock markets in the region will have as big a year as they did in 2004, which saw the emerging-market asset class as a whole jump 80 percent.
In addition to uncertain external factors that could hurt the global economy, investors across Latin America have turned to profit taking as they cash in on the recent big gains.
Global growth is slowing, and while the dollar may not fare so well in Europe, it still remains relatively strong in Latin America, which also hurts gains.
The specter of a rise U.S. interest rates this year also threatens stocks in the region. When the United States raises its rates, it tempts investors' cash out of the riskier investments in Latin America.
But not everyone is going to pull out of the region this year. The growing presence of China as an export destination for Latin American goods has proven to significantly aid the economic portrait in the region's countries.
Brazil, for instance, is probably the biggest winner when it comes to the strong demand of China and high commodity prices worldwide.
But those positives for the economy are leading to renewed worries about inflation in Brazil.
The country's Central Bank President Henrique Meirelles expressed those worries this week as he met with the International Monetary Fund's Charles Collyns.
Brazil, in an effort to beat down inflation, has raised its interest rate 2.25 percent since September. There is every indication that those rates will continue to climb until inflation fears are lessened.
But Collyns affirmed the IMF's confidence in the measures the Brazilian government is taking on the economic front.
In addition to the proactive stance Brazil is taking on inflation, Collyns highlighted the central bank's moves to keep Brazil's local currency from rising too much against the dollar. A strong local currency would have the affect of making the country's exports more expensive and less competitive.
For the week, Brazil's Bovespa stock index ended up 75 points at 24,605 Wednesday.
Mexico saw its debt rating upped one notch by Standard and Poor's this week, as the credit rating agency gave the country a "BBB" rating.
That brings S&P's rating up to the level that Moody's has for the country.
Officials within President Vicente Fox's government are playing down the upgrade, saying that the benefits won't be as much as they could be if the country's congress would pass the presidents proposed economic reforms.
But the market thought otherwise, and investors flocked to Mexico's debt after the upgrade announcement.
In its report, S&P noted Mexico's "gradually increasing macroeconomic stability, attributable to a steady improvement in external liquidity and deepening domestic financial markets."
S&P's upgrade was its first for Mexico since early 2002.
More good news for Mexico came in the form of lessening worries about inflation, according to the Bank of Mexico's monthly survey of economists.
Those surveyed forecast inflation at 4 percent for this year, which falls within the central bank's target.
The last survey put inflation for this year 4.32 percent.
Regardless, the central bank remains vigilant on inflationary pressures, having just last week tightened monetary policy for the seventh straight month.
But that has done little to douse enthusiasm for the country equities.
The IPC stock index gained 294 points to close at 13,339.
Argentina is expecting a drop in its trade this year, with officials forecasting a surplus of $10 billion.
Last year, Argentina saw a surplus of $12.1 billion, down from $15.7 billion in 2003.
An Industry Ministry report is forecasting growth in exports of 3 percent this year, with revenues of some $35.5 billion.
That is a steep drop from the 17 percent increase exports saw in 2004.
Officials said the biggest cause of concern is an drop in global commodity prices, which aren't expected to maintain the high level they saw last year.
Helping the trade account will be declining growth in imports as well. The ministry report forecast import growth of 14.8 percent this year, totaling $25.9 billion.
Imports in 2004 grew by 61 percent.
Meanwhile, the government of President Nestor Kirchner took a blow when a closely watched opinion poll indicated that confidence in the government fell 3 percent in January.
That was the second consecutive month that confidence fell.
But some good news for Argentina did come in the form of signals from S&P that they will upgrade the country's debt once its debt restructuring comes to a successful conclusion.
Argentina began its debt swap on Jan. 14 and it will end on Feb. 25.
While S&P didn't define what it would consider a successful debt swap, most interested parties are looking at 70 percent participation from the holders of Argentina's defaulted debt as the minimum.
The signal from S&P is important for the government in that it gives confidence to those holders of Argentine debt to participate in the restructuring.
For the week, Argentina's Merval stock index added 16 points to close at 1,371.
Chile's IMCE business confidence index rose in January.
A survey showed general optimism for the "coming months in all sectors," especially in retail and construction.
The January reading of 63 points - anything over 50 is considered optimistic - was the second-highest reading since the index was debuted in late 2003.
Meanwhile, Chilean officials are moving aggressively ahead in their free trade talks with Japan.
Officials from both countries concluded their first meeting to look at the details of any proposed deal, and they scheduled a second meeting for late April.
For the week, Chile's IPSA stock index gained 29 points to end at 1,802.
Venezuela's state-run oil company - PdVSA - is examining its refining business in the United States to determine if it should be sold or restructured.
Felix Rodriguez, head of the company's U.S. unit, made that statement, just one day after President Hugo Chavez told reporters that the company would sell all its businesses in the "north."
Chavez told reporters that the businesses bring in little in the way of tax receipts and employ few Venezuelans.
Venezuela is the world's fifth-largest producer of oil and a major supplier to the United States.
Chavez, who has fiercely clashed with the Bush administration, has said that he wants to reduce Venezuela's dependence on the United States as a consumer of its oil.
On the stock market front, the country's IBC index added 487 points to close at 29,711.
Colombian officials said this week that talks on the free trade deal between the United States and three Andean nations are at a critical juncture.
Commerce Minister Jorge Humberto Botero said negotiations regarding rules on financial services, e-commerce and competition policy are at an advanced and difficult stage.
Ecuador and Peru, along with Colombia, are looking to close the trade deal with the United States this year. A seventh round of negotiations on the proposed deal will begin next week.
Colombian officials also said that should talks on the deal break down, they are prepared to negotiate a bi-lateral deal with the United States.
For the week, Colombia's IGBC stock index gained 265 points to end at 4,579.
