By Carla Mozee
Brazil's key equity index fell Friday, pulling back from a jump
in the previous session upon the start of a new interest-rate
tightening cycle in Latin America's largest economy.
Brazil's Bovespa fell 0.7% to 67,529.73, led by a 2% decline
among the heavily weighted steel group. Shares of Gerdau (GGB) fell
1.6%, MMX Mineracao fell 3.8% and Usiminas declined 3.3%.
Shares of Brazil's Vale (RIO) fell 2.8% after the world's
largest iron ore miner said it will pay $2.5 billion in cash for a
51% stake in BSG Resources. The British mining company holds
iron-ore concessions in West African country of Guinea
The Bovespa's loss was somewhat capped by gains among retailers,
home builders, communications issues and consumer-discretionary
shares. Advancers were led by rises of 4.7% each in shares of PDG
Realty (PDGRY) and grocer CBD (CBD).
Shares of Lojas Renner rose 3.6% after the department store
operator posted a first-quarter profit of 36.9 million reals ($21.2
million), compared with 10.9 million reals in the same quarter last
year.
The Bovespa rose 2% in the previous session after Brazil's
central bank late Wednesday raised its key interest rate to 9.5%
from the historic low of 8.75%. The hike arrived amid concerns that
the economy is at risk of overheating and as data show a buildup in
inflationary pressures.
Frederick Searby, an equity strategist covering Latin America at
Deutsche Bank, recommended in a note Friday that clients stay long
in financials, staples and health care stocks, "which fare well" in
tightening cycles.
"We also recommend in somewhat contrarian fashion telcos, due to
sector consolidation and outlier cheap valuations," he wrote.
The broker said its Brazil focus list includes Natura Cosmeticos
, dental benefits provider Odontoprev , card-payment processor
Cielo (CIOXY) and stock-exchange operator BM&F Bovespa .
The Bovespa dropped 2.8% for the week, and fell 4% for the
month, the first monthly decline since January. It's down 1.5% on a
year-to-date basis.
Mexico's IPC lost grip of earlier gains Friday, and fell 0.5% to
32, 687.32. The index fell 1.7% for the month, the first monthly
loss since January.
But investors also pushed shares of supermarket-chain operator
Grupo Comercial Chedraui higher in the company's trading debut in
Mexico City. Its B shares rose 5.9% to 36 pesos ($2.92) after
pricing at 34 pesos. Chedraui is the first company to launch an
initial public offering in the Mexican market in nearly two
years.
Shares of heavyweight America Movil (AMX) also rose, by 1.9%.
The wireless giant on Thursday posted first-quarter net earnings of
16.9 billion pesos, up from 16.6 billion pesos from a year-ago.
Analysts polled by Dow Jones Newswires had expected a profit of
19.1 billion.
Chile's IPSA rose 0.4% to 3,865. It closed the month with a 2.7%
advance.
Argentina's Merval fell 1 point on Friday to 2,428.43, and
finished April with a 2.3% gain.