💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

EMERGING MARKETS-Latam stocks drop on Spain, coming end-of-year

Published 12/15/2010, 12:32 PM
Updated 12/15/2010, 12:36 PM
HG
-

* Bovespa down 1.16 pct, Mexico's IPC off 0.47 pct

* Moody's warns Spain on possible debt downgrade

* Grupo Mexico falls as UBS cuts stock to sell (Updates to afternoon)

By Luciana Lopez and Michael O'Boyle

SAO PAULO/MEXICO CITY, Dec 15 (Reuters) - Latin American stocks fell on Wednesday as concerns about a possible broadening of the European debt crisis led investors to square positions ahead of year-end.

The MSCI Latin American stocks index <.MILA00000PUS> lost 0.81 percent after gaining in the two previous sessions. The index traded within a range bound by its 50-day simple moving average at the top and the 20-day simple moving average on the bottom.

"Everything's a reason to book profits here now," said Hamilton Moreira, senior analyst with BB Investimentos in Sao Paulo. "The issue comes down to one thing: Foreigners are pulling out."

Brazilian equities surged 83 percent last year, getting more expensive relative to other lagging markets around the world, Moreira noted. Short-term prospects in other parts of the world are now luring away foreign liquidity, he said.

The Bovespa index <.BVSP> moved down 1.16 percent on Wednesday, dropping into the red for the year.

"We're at a point in the year where people usually take on less risk," said Carlos Camacho, a fund manager with GAP Asset Management in Rio de Janeiro.

Stoking risk aversion, ratings agency Moody's warned Spain on Wednesday that its debt rating could be downgraded, the latest chapter in an ongoing European debt crisis that has roiled financial markets throughout the year. [ID:nLDE6BE0B8]

A Spanish bailout could soak up far more resources than rescue packages for smaller economies like Greece and Ireland and have deeper implications for European economic growth.

Heavyweight commodity companies led the Bovespa lower, including mining company Vale , the world's largest producer of iron ore, which gave up 1.14 percent.

State-controlled energy company Petrobras retreated 1.24 percent.

Steelmakers also fell, with Gerdau moving down 1.7 percent, Usiminas 1.94 percent and CSN 2.65 percent.

Mexico's IPC stock index <.MXX> fell 0.47 percent in thin volume, retreating from a life-high close in the previous session.

Traders said they were seeing a sharp drop in volume this month.

"We are sitting here stabbing out our eyes from boredom," said Carlos Alonso, head of trading at stock brokerage Interacciones.

Nevertheless, Mexican equities could outstrip regional peers next year, analysts noted.

"We expect Mexico's equity market to once again outperform Brazil's equity market in 2011, just as it has so far done in 2010 -- following comparatively better U.S. fundamentals and the fact that the Brazil trade seems crowded," wrote analysts from Bulltick Capital Markets in a report to clients.

Shares of mining company Grupo Mexico fell 1.61 percent. UBS cut the shares to sell from neutral, saying record copper prices took the shares above the bank's "sum of the parts" valuation model.

Chile's IPSA index <.IPSA> rose 0.48 percent, adding to gains in the previous session.

Retailers gained, with Falabella up 1.77 percent and Cencosud rising 1.16 percent. (Editing by Dan Grebler)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.