By Carla Mozee
Brazilian equities ticked up Thursday, with federally run Banco
do Brasil registering gains after the company's quarterly earnings
surpassed analysts' expectations.
In Argentina, a rally in oil prices helped equities remain
higher after a key entity downgraded the country from
emerging-market status, a move that was widely expected but
underscored the country's fragile financial situation.
Brazil's Bovespa rose 0.1% to 39,730.33, enough of an advance to
log its first win in three sessions.
Ordinary shares of oil giant and market heavyweight Petrobras
(PBR) rose 2%, paring stronger gains. The company's more heavily
traded preferred shares rose 1.6% as crude prices climbed. Oil
surged 14% to near $40 a barrel following a report that showed U.S.
inventories unexpectedly fell for the first time in eight
weeks.
The one-week inventory decline "is not sufficient to turn this
market around, but it will scare the bears," wrote Morgan Stanley
analyst Hussein Allidina in a note Thursday. "However, stocks
remain bloated, refiners are going into turnarounds and this week's
stats will hurt cracks, limiting crude demand."
Also, Petrobras on Wednesday said it and China Development Bank
Corp. have signed a memorandum of understanding for the bank to
provide the oil firm with a $10 billion loan, which will be used to
help Petrobras finance its five-year, $174.4 billion strategic
plan. Petrobras also has signed an MOU to export 60,000 to 100,000
barrels of oil a day to China Petroleum & Chemical Corp., also
known as Sinopec (SNP).
Shares of Banco do Brasil also ranked high among the session's
advancers by gaining 2.2%. The company said its fourth-quarter
profit jumped from the year-ago period on credit-portfolio
expansion and a one-time gain related to pension plan assets. Its
net earnings climbed to 2.94 billion reals ($1.26 billion). Its
loan portfolio rose 11.2% from the previous quarter.
Excluding the one-time gain, earnings would have been 1.6
billion reals, above the estimate of 1.5 billion reals by analysts
polled by Dow Jones Newswires.
Yet shares of Gerdau (GGB) fell 2.1% after the steel maker
posted a 67% drop in fourth-quarter profit to 311 million reals
($132.3 million), and said its results were hurt by the worldwide
financial crisis.
Steel maker Usiminas also said demand has slowed because of
global turmoil. The company reported a 14% decline in
fourth-quarter profit to 837 million reals. Net revenue, however,
rose 7% to 3.73 billion reals. Usiminas shares lost earlier gains
and fell 0.1%.
Argentina, the next frontier
In Argentina, the benchmark Merval index rose 1% to 1,058.12,
aided by a 4.7% jump in Buenos Aires-listed shares of Petrobras,
and a 1.8% gain in shares of Tenaris (TS), whose steel tubes are
used for oil and gas operations.
Earlier Thursday, MSCI Barra said it will downgrade Argentina to
frontier-market status from emerging-market status in its indexes,
citing the country's "continued restrictions to in- and outflows of
capital" in the equity market.
Frontier markets, which include Sri Lanka, Vietnam, Lebanon and
Kazakhstan, are smaller and considered riskier than emerging
markets. The change will take place in May.
The expectation for the downgrade has been in place for the past
four to five months, said Christian Reos, a Buenos Aires-based
equity analyst at Allaria Ledesma & Cia., in a telephone
interview.
"The market has already discounted the effect," and the arrival
of the official announcement won't have much impact on what's
already been happening in the market.
"Volume is very little now. It's not dead, but it's almost dead.
We're in a quiet market," with shares of Petrobras and Tenaris
dominating about 40% of the Merval index, Reos commented. "Our
index is very linked to the world, and the oil sector; it's not
completely local."
Tenaris is headquartered in Luxembourg.
After recent changes to the lineup, the Merval now has just 14
constituents. The market has been rocked in recent months in the
wake of the nationalization of private pension funds.
Reos said if an upswing in the oil markets firmly takes hold,
the Merval has the potential for healthy gains this year. The
Merval is down 1.2% so far in 2009. The MSCI Argentina Index is off
12% and the MSCI Emerging Markets Index has lost 9%.
Mexico's IPC slipped 0.3% to 18,682.47, while Chile's IPSA rose
0.7% to 2,628.75.